Clause guide
Payment Terms clause: meaning, risks, and what to negotiate
Sets when payment is due, how invoicing works, and what happens if payment is late.
What it means
Cash flow, late fees, withholding rights, and invoice approval mechanics all live here. Weak payment language can delay revenue or create disputes.
Common risks
- • The payment window may be too long.
- • Acceptance criteria may be vague and delay payment.
- • The other side may reserve broad rights to offset or dispute invoices.
What to check before signing
- • When are invoices due?
- • Are late fees or interest clearly stated?
- • Can the customer withhold payment easily?
Negotiation ideas
- • Shorten payment terms where possible.
- • Add deemed acceptance if deliverables are not rejected promptly.
- • Limit offset rights and require specific dispute notices.
Example clause
“Client shall pay undisputed invoices within fifteen (15) days of receipt. Any disputed amount must be identified in writing with reasonable detail within five (5) business days.”
Frequently asked questions
What are standard payment terms?
Net 15 and Net 30 are both common, depending on the industry and leverage of the parties.
Related clauses
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