Payment Terms Clause
What it is
Payment terms define when you get paid, how much, and what happens if payment is late. They include the payment period (Net 15, Net 30, Net 60), any upfront deposit, milestone structure, and the mechanism for invoicing. They also determine whether late payment has any consequence.
Why it matters to you
Long payment terms are how clients use your cash flow instead of their own. You deliver work in week one and wait thirteen weeks for payment — during which you have covered your own costs, taxes, and time. Vague approval clauses make it worse: if "payment is due upon final approval" and approval is never granted, payment never comes. A clear payment structure protects your cash flow before the work begins.
The aggressive version
This payment language creates maximum flexibility for the client while offering you minimal protection.
Client shall pay undisputed invoices within sixty (60) days of receipt. Client retains the right to dispute any invoice within thirty (30) days of receipt. Payment of any disputed amount shall be withheld until resolution, which shall be determined solely by Client in its reasonable judgment. Milestone payments are due only upon Client's written acceptance of each milestone, which acceptance shall not be unreasonably withheld.
What each part does to you
“undisputed invoices”
Any invoice can be disputed, triggering a separate resolution process. This creates an easy way to delay payment indefinitely.
“within sixty (60) days of receipt”
Net 60 means you wait two months for payment. Combined with a dispute right, this is effectively open-ended.
“determined solely by Client in its reasonable judgment”
They decide whether their own dispute was valid. This is not an independent process.
“acceptance shall not be unreasonably withheld”
This phrase sounds protective but is vague. What counts as reasonable? This clause has been used to delay milestone payments for months.
The market standard version
Fair payment terms balance the client's need for invoice review time against the contractor's need for predictable cash flow.
Client shall pay all invoices within thirty (30) days of receipt. A deposit of twenty-five percent (25%) of the total project fee is due upon signing. Milestone payments are due within ten (10) business days of Contractor's written notice of milestone completion. If Client does not raise a written objection within five (5) business days of a milestone notice, the milestone shall be deemed accepted. Overdue amounts accrue interest at one and a half percent (1.5%) per month.
Your counter-language
This version protects your cash flow with a deposit, a short payment window, and a late-fee provision.
A deposit of twenty-five percent (25%) of the estimated total is due on signing. Remaining invoices are due within fifteen (15) days of receipt. Milestone payments are due within ten (10) business days of written completion notice; absence of written objection within five (5) business days constitutes acceptance. Overdue amounts accrue interest at one and a half percent (1.5%) per month, or the maximum rate allowed by applicable law. Client agrees to pay reasonable collection costs for amounts more than sixty (60) days overdue.
What to ask for
“Can we shorten the payment period to Net 15 or Net 30, with a deposit on signing?”
“Can we set milestone acceptance as automatic if you don't raise a written objection within five business days?”
“Can we add a late-payment interest clause so there is a real cost to paying late?”
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ClauseCheck is not a law firm and does not provide legal advice. The clause examples and counter-language on this page are illustrative only and are not a substitute for advice from a qualified attorney. Contract terms vary by context; consult a lawyer before making decisions on any specific agreement.
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