Understanding Payment Terms in Client Agreements

Payment terms in client agreements define when and how you get paid. Misreading them can lead to long waits, cash flow problems, or disputes—especially when the client is slow to pay or when "acceptance" is vague. A contract that says "payment within 30 days" can mean something very different from "payment on acceptance." Here's a plain-language guide to the most common payment terms, what they usually mean in practice, and what to ask for so you're not left waiting with no recourse.

Common payment terms

Before you sign, make sure you understand exactly when the clock starts and when payment is due. Small wording changes can mean big differences in when you see the money.

Net 30 / Net 60 / Net 90

You send an invoice, and the client has that many days to pay. "Net 30" means payment is due 30 days after the invoice date (or sometimes after the invoice is received). Net 30 is common and reasonable—you'll typically get paid within a month of invoicing. Net 60 or 90 is slow: you might wait two or three months after you finish the work before you see any money. That can strain your cash flow, especially if you're doing a large project or have expenses (e.g. subcontractors, tools) to cover upfront. If the client insists on net 60 or 90, push back—or negotiate a partial upfront payment (e.g. 50% on signing, 50% on delivery) so you're not carrying the full cost. Also check when the clock starts: is it from the invoice date, the delivery date, or the "acceptance" date? Prefer invoice date or delivery date so you're not waiting on the client to "accept" before the clock even starts.

Payment on acceptance

Payment is due when the client "accepts" or "approves" the work. The problem is that acceptance is often undefined. Does the client have to sign something? Send an email? Just not object within X days? If acceptance is subjective ("when we're satisfied"), the client can delay indefinitely by saying "we need a few more tweaks." Prefer "payment within X days of delivery" or "payment within X days of invoice"—so the trigger is something you control (you delivered, you invoiced). If they insist on "on acceptance," ask for a clear definition: for example, "acceptance occurs 7 days after delivery unless the client provides written feedback specifying why the work does not meet the agreed scope." That way you're not stuck waiting forever. Also ask what happens if there's a dispute: do you still get paid for undisputed work? Can you escalate (e.g. mediation) if they refuse to accept unreasonably?

Milestone-based payment

You get a share of the fee at certain milestones—e.g. 30% on signing, 40% on first draft, 30% on final delivery. That's common and can help your cash flow. But make sure the milestones are clearly defined and not subject to vague "satisfaction." For example, "40% on first draft" should mean "40% within X days of delivery of the first draft"—not "40% when the client approves the first draft." If approval is required, add a deadline: "approval or written feedback within 14 days of delivery; if no feedback, deemed accepted." Otherwise the client can sit on the draft and delay your payment. Also clarify what "first draft" or "final delivery" means—deliverables should be specified in the scope so there's no dispute about whether the milestone is met.

Late payment and fees

What happens if the client pays late? Many contracts are silent—which means you have no leverage beyond chasing them. Here's what to look for and what to ask for.

Late payment interest

Some contracts allow you to charge interest or a late fee after a grace period (e.g. 1.5% per month after 30 days late). That gives you leverage and compensates you for the delay. If the contract doesn't mention late fees, consider asking for a clause: for example, "interest at 1.5% per month (or the maximum rate permitted by law) on overdue amounts, accruing from the due date." In some places there's a statutory rate (e.g. in the UK); check your jurisdiction. Even if you never enforce it, having the clause can encourage the client to pay on time.

No late fee

If the agreement is silent, you may have no recourse beyond sending reminders and, in the worst case, pursuing a claim (which can be costly and time-consuming). Before you sign, consider asking for a late payment clause. If the client won't agree to interest, at least ask for a flat fee after X days late (e.g. $50 or 5% of the overdue amount)—something that signals that late payment has a cost. And make sure you have a clear process: when do you send the first reminder? When do you escalate (e.g. stop work until paid)? Put it in writing so you're not guessing.

What to ask for

Before you sign, try to get these in the contract.

• Prefer net 30 or shorter. If the client insists on net 60 or 90, push for a partial upfront payment so you're not funding the whole project.
• Tie payment to invoice date or delivery date, not "acceptance" unless acceptance is clearly defined and time-limited (e.g. "deemed accepted 7 days after delivery if no written feedback").
• Include a late payment clause—interest or a flat fee after a grace period—so you're not left waiting with no recourse.
• Define milestones clearly if payment is milestone-based. Each milestone should have a clear deliverable and a clear due date for payment (e.g. "payment within 14 days of delivery of milestone 2").
• BeforeYouSign can highlight payment and timing clauses in your contract so you can negotiate with confidence.