Updated on 30 September 2026 by the Proposal Expert editorial team
Every common term explained, wording to copy and the UK and US rules on late payment
Payment terms tell your customer how much to pay, by when and how, for example net 30, which means the full amount is due 30 days after the invoice date. Agree them in the quote or proposal before any work starts, and repeat them on the invoice, because a term that first appears on the invoice is one the customer never agreed to. In the UK, a business customer that has not agreed a payment date must pay within 30 days, and statutory interest can apply after that. In the US, payment terms are mostly a matter of contract and state law. Below you find what each common term means, how to choose, wording to copy, early payment discounts, deposits and milestones, and the late payment rules in both countries.
Net 30 means the customer pays the full invoice amount within 30 days of the invoice date. "Net" here means the whole amount without any deduction. It does not mean the price before VAT or sales tax. The days are calendar days, weekends and holidays included, unless your terms say business days. An invoice dated 1 October 2026 on net 30 is due on 31 October 2026. On net 60 it is due on 30 November 2026. These are the payment terms you will meet most often on quotes and invoices:
Many payment disputes start here, and most guides skip it. Write the starting point into your terms, for example "within 30 days of the invoice date", and send the invoice on the day you finish. If you leave it open, the law fills the gap, and it does so differently in each country. In the UK, GOV.UK explains that if no payment date is agreed with a business customer, payment is late 30 days after the customer gets the invoice or after you deliver the goods or service, whichever is later. In the US, for a sale of goods where nothing else is agreed, the Uniform Commercial Code makes payment due at the time and place at which the buyer is to receive the goods (UCC section 2-310(a)). Where you ship goods on credit, the credit period runs from the time of shipment, but post-dating the invoice or delaying it delays the start of the credit period by the same amount (UCC section 2-310(d)). Federal agencies follow their own rule: if the contract sets no payment date, payment is due 30 days after a proper invoice is received (31 U.S.C. section 3903).
Choose terms that match the size of the job, how long you can wait for your money and how well you know the customer. Short terms help your cash flow, but a large business customer may only accept what its accounts payable process allows. Longer terms are a form of credit, so treat them as part of the price. In the UK there is also a ceiling on what you can agree with a business customer. GOV.UK says an agreed payment date must usually be within 60 days for business transactions and within 30 days for public authorities. Under section 4 of the Late Payment of Commercial Debts (Interest) Act 1998, if you agree a payment date more than 60 days out with a buyer that is not a public authority, statutory interest can still start after day 60, unless the longer period is not grossly unfair to the supplier. As a starting point:
Put the payment terms in the quote, next to the total, so the customer sees them before accepting, and repeat them on every invoice. State the amount or percentage, the trigger (acceptance, delivery or the invoice date) and the number of days. Also say how to pay, because a customer who has to ask for your bank details pays later. Copy and adapt these lines and replace the parts in square brackets. If you send quotes with Proposal Expert, the customer signs the whole quote, terms included, with an electronic signature that carries a trusted timestamp and a sealed audit trail, so you can show later which terms were accepted and when.
2/10 net 30 means the customer may take 2% off if it pays within 10 days of the invoice date. Otherwise the full amount is due within 30 days. On an invoice of $5,000, the customer pays $4,900 by day 10 or $5,000 by day 30. The discount looks small, but it is expensive money for you. The customer gets 2% for paying 20 days early, which works out at about 37% a year (2/98 × 365/20). Even 1/10 net 30 costs about 18% a year. Offer a discount only when getting paid 20 days sooner is really worth that much, for example when you would otherwise borrow at a higher rate. In the UK, VAT follows the money actually paid. HMRC's VAT guide (VAT Notice 700, paragraph 7.3) says that when you offer a discount for payment within a specified time, the value for VAT is the amount actually paid. If you have to account for the VAT before you know whether the discount is taken, you declare VAT on the undiscounted price. If you do not issue a credit note when the discount is taken, the original invoice must show the discount terms and state that the customer can only recover as input tax the VAT actually paid (paragraph 18.2.2). HMRC recommends this wording on the invoice:
A deposit covers your material costs and shows that the customer is serious. Milestone payments keep a longer project close to cash-neutral, because you are never far ahead of what you have been paid. Tie each milestone to something the customer can check, such as "design approved" or "first floor finished", rather than to a date alone. Some sectors have their own rules:
The Late Payment of Commercial Debts (Interest) Act 1998 gives you statutory interest when a business customer pays late. It applies to contracts for goods or services where both sides act in the course of a business (section 2), so it does not cover private consumers. GOV.UK sets out three parts. First, statutory interest of 8% plus the Bank of England base rate. The base rate you use is the one in force on 30 June if interest starts to run between 1 July and 31 December, and the one in force on the previous 31 December if it starts between 1 January and 30 June (Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4). Second, a fixed sum for each late payment under section 5A. Third, your reasonable costs of recovering the debt where they are higher than the fixed sum. According to GOV.UK, you cannot claim statutory interest if your contract sets a different rate of interest.
The US has no federal rule like the UK Act for invoices between private businesses. The federal Prompt Payment Act of 1982 is aimed at federal agencies. It requires them to pay their bills on time and to pay interest penalties when they pay late (Bureau of the Fiscal Service, U.S. Department of the Treasury). When a private customer pays you late, what you can charge depends on your contract and on state law. Interest limits under usury laws are usually set by state statute and differ from one state to another, and some states, such as Nevada, have no usury law at all (Cornell Legal Information Institute, Wex: usury). The practical rule is therefore the same across the US: put the late charge in the quote, make sure the customer accepts it before you start, and check the limits in your state before you set the rate.
Usually, yes. In everyday use, net 30 means 30 calendar days from the invoice date, so an invoice dated 1 October 2026 is due on 31 October 2026. Some customers count from the day they receive the invoice or the goods, so write "within 30 days of the invoice date" to rule that out. If the due date can fall on a weekend, say in your terms whether payment on the next working day is still on time.
Due on receipt means the invoice is payable as soon as the customer receives it. It suits small jobs, work for private customers and customers you do not know yet. Agree it in the quote rather than only printing it on the invoice. In the UK, GOV.UK says that unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service.
There is no single standard. Net 30 is the most familiar for business customers, and 7 or 14 days is common for small jobs. If you agree nothing, the statutory default of 30 days applies to business customers. If you do agree a date, GOV.UK says it must usually be within 60 days for business transactions and within 30 days for public authorities.
In the UK, for business customers, yes. The 1998 Act makes statutory interest an implied term of the contract (section 1), and the fixed sums under section 5A come on top. The Act does not cover private consumers (section 2), and the US has no equivalent for private customers, so do not rely on a late charge you never agreed. Put it in the quote.
On both. The quote is where the customer agrees to them, together with the price and the scope. The invoice repeats them and turns them into a concrete due date. GOV.UK lists how much the customer needs to pay you and when the customer must pay you among the information an invoice must include.