Payment terms that protect you — set them before the work starts
Most payment pain is decided before the job begins, in the lines nobody wrote down. This guide covers the terms a small firm should print on every quote and invoice — deposits, milestones, due dates, retention and the late-payment line — so the money conversation happens once, at the start, in writing.
What belongs in the terms, every time?
Five lines do most of the work. The deposit: how much, and what it buys (materials, a booked slot). The payment schedule: when each slice falls due — on order, at a milestone, on completion. The due date for each invoice: a number of days, not "on completion" and never "when convenient". The retention position on project work: what percentage, and when each slice releases. And the variation rule: extra work is priced and approved before it is done, not argued after.
None of this needs a lawyer's vocabulary. It needs to be on the quote the client accepts — because the quote, once accepted, is the agreement both sides point at. The guide to deposits covers sizing the first payment; this one is about the whole frame the payments sit in.
How should due dates and late payment be worded?
Put a date, not a mood. "Payable within 14 days of the invoice date" beats "payment due on receipt" because it can be pointed at on day 15. The wording stays polite and factual: the terms state what happens next — work pauses on unpaid stages, the next phase is scheduled after payment clears. Firms are often shy of the late line; clients are rarely surprised by it. Main contractors and companies expect terms on every document they receive.
The terms only protect you if they were agreed before the work. Adding conditions to an invoice the client sees for the first time after the job is an argument, not a term — which is why the same wording belongs on the quote first and flows onto every invoice after it.
What do you do when a client pushes back on terms?
Pushback is usually about one line, not the whole frame — a smaller deposit, a longer due date. Trading one line for something of equal value (a bigger first progress payment, materials paid in advance) keeps the frame standing. What you never trade away is the written schedule itself: the moment payments become "we'll sort it as we go", the firm is financing the client's job with no agreed end.
If a client will not accept any terms at all, that is information, and it arrives at the cheapest possible moment — before you have spent money on their job. The guide to chasing late payment covers the other end of the same road.
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What payment terms should a small firm use?+
A deposit that covers materials, a written schedule tied to milestones, a fixed number of days for each invoice, the retention position on project work, and a variations rule — printed on the quote, so acceptance makes them agreed terms.
Should payment terms be on the quote or only the invoice?+
On the quote first. Terms first seen on an invoice, after the work, are easy to dispute; terms on an accepted quote were agreed before anything was spent.
How many days should an invoice allow?+
Whatever your cash flow needs, stated plainly — 7 to 30 days are all seen. Shorter is normal for small jobs and callouts; project claims follow the contract's own cycle.
Can I charge for late payment?+
Only if something the client agreed to says so — which is exactly why the line belongs in the terms on the quote. Interest and fee clauses vary by contract and jurisdiction; your terms should state what your agreement actually provides, and a tax adviser or lawyer is the right check for stronger wording.