Invoice payment terms are the lines on your invoice and contract that say when you must be paid, and what happens if you are not. Most freelancers treat them as decoration. That is a mistake: your payment terms decide the exact day the late-payment clock starts ticking, and they determine how much leverage you have when a client goes quiet. With the Commercial Payments Bill — the UK’s big late-payment reform — scheduled for its House of Lords third reading on 20 October 2026, payment terms are back in the headlines. This guide shows you how to write terms that actually protect you, whether or not the new law ever arrives.

This is general information, not legal or financial advice. If the amount is large or the situation is disputed, get proper professional advice.

Why your payment terms matter more than the headlines

Here is the core insight: the rights you already have under the Late Payment of Commercial Debts (Interest) Act 1998 switch on at a moment your own paperwork defines. Statutory interest accrues daily from the day after the payment due date. So the due date you put on your invoice is the starting gun.

  • Invoice says “payment due within 14 days” → the clock starts on day 15.
  • Invoice says nothing about timing → the law falls back to a default of 30 days after the client receives the invoice (or you delivered the work, whichever is later).
  • Invoice says “60 days” because that is what the client asked for → you wait two months before a single pound of interest is owed.

Same invoice, same client, same law — three different outcomes, decided by a line you wrote. Our guide to your UK late payment rights covers the full legal picture; this article is the practical part: the wording.

14 days or 30 days: which should you pick?

Nothing in UK law forces you to use 30 days. For business-to-business contracts, gov.uk guidance is that an agreed payment date should usually be within 60 days, and terms beyond that are only lawful if they are fair to both sides. Within that ceiling, the number is your choice. Here is an honest comparison.

14-day terms suit you if:

  • You work project-to-project with thin cash reserves. Getting paid two weeks sooner on a £3,000 invoice is the difference between a calm month and a credit-card month.
  • Your clients are small businesses or startups, who typically process invoices quickly and will not blink at 14 days.
  • You want an early-warning system. A client who misses a 14-day term at day 21 is waving a red flag while you can still act; on 30-day terms you would not even know there was a problem yet.

30-day terms suit you if:

  • You work with large corporates or agencies whose accounts-payable departments genuinely run on monthly cycles. Demanding 14 days from a FTSE finance team can mark you as difficult without getting you paid any faster — the invoice simply sits until the next payment run.
  • Your contracts are high-value and long-term, where the relationship matters more than a fortnight of cash flow.

The freelancer’s sweet spot. Many experienced freelancers quote 30 days on paper but write “payment due within 14 days” on the invoice itself, or offer a small prompt-payment incentive. What matters most is not the number — it is that a specific date appears. “Payment due by 28 Oct 2026” beats “Net 30” every time, because a calendar date is impossible to misread.

The five lines your invoices and contracts should include

You do not need legalese. You need five short, plain-English statements. Put them in your terms of business (or your contract) and summarise the key one in your invoice footer.

1. A concrete due date

“Payment is due within 14 days of the invoice date. Invoice #INV-2026-041, dated 14 Oct 2026, is payable by 28 Oct 2026.”

Always compute the actual date and print it. “Net 14” is jargon; “payable by 28 Oct 2026” is a deadline.

2. The statutory interest clause

“Late payments will incur statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, currently 8 percentage points above the Bank of England base rate (11.75% per annum as at 14 Oct 2026).”

Two things worth knowing. First, the right to statutory interest is automatic for B2B contracts even if you write nothing — the clause just removes any argument about it. Second, it does not apply to private individuals buying from you as consumers; if you invoice consumers, you need your own contractual late-payment clause. (Our rights guide explains the B2B boundary in detail.)

3. The fixed compensation line

“In addition to interest, we will claim the fixed compensation of £40, £70 or £100 per late invoice provided for by the Act, depending on the invoice value.”

Many freelancers leave this money on the table. The tiers are set by law: £40 for debts up to £999.99, £70 for £1,000–£9,999.99, and £100 for £10,000 and above. On a £1,850 invoice paid 40 days late, that is £70 plus roughly £30 of interest — nearly £100 your terms should already be claiming. Work out the exact figure for any invoice with our late payment interest calculator.

4. A dispute-notification rule

“If you wish to dispute any part of this invoice, please notify us in writing within 7 days of receipt, stating the disputed amount and reasons. Undisputed amounts remain payable by the due date.”

This is the clause most freelancers are missing, and it is the one the reform is aimed at. A classic delaying tactic is the vague query raised on day 29 — “just checking a few things on the invoice” — which resets the conversation and the clock. A written dispute deadline with a reasons requirement makes that tactic visible. Keep the emails: under the proposed new rules, buyers who raise disputes late or without sufficient information would face consequences.

5. A pause-work right

“We reserve the right to pause further work on any account with invoices more than 14 days overdue, until the account is brought up to date.”

This is your practical leverage. Interest compensates you after the fact; pausing work protects you from digging a deeper hole. State it upfront, in writing, before you ever need it — invoking a right the client agreed to is a business decision, not a confrontation.

The 60-day question: what the reform would change

Payment terms are in the news because the Commercial Payments Bill would put a hard ceiling on them. Here is the picture as it stands, with the honest caveat that none of this is law yet.

The timeline. The Bill was introduced to the House of Lords in May 2026 (it was initially floated under the name of the Small Business Protections Bill, and some coverage still uses that name). It completed its Lords report stage on 15 September 2026, and its third reading is scheduled for 20 October 2026 — though Parliament marks future dates as provisional. After the Lords it still has to pass through the Commons and receive Royal Assent. Implementation is widely expected during 2027, and the measures would not apply retrospectively.

What it would do to payment terms. Maximum payment periods of 60 days for private-sector contracts and 30 days where the purchaser is a public authority, with strictly limited exemptions. Terms exceeding the caps would be automatically void and replaced by the statutory defaults, whatever the contract says. Statutory interest would become an implied term that parties can no longer contract out of — closing the “substantial remedy” escape route some contracts currently rely on.

The context is stark: research commissioned by the government and the Small Business Commissioner in 2025 estimated that UK businesses were owed £26 billion in overdue payments at any given time, with late payment costing the economy almost £11 billion a year.

What it means for your wording today. If a client pushes 90-day “standard terms” on you now, you can already push back: terms beyond 60 days are only lawful between businesses if fair to both sides, and a one-sided 90-day term imposed on a solo freelancer by a large corporate is exactly the arrangement the courts and the reform have in their sights. Try this:

“Our standard terms are 14 days. We can discuss 30 days to fit your payment run, but we can’t accept 90 — payment terms over 60 days need to be fair to both sides under UK law, and the incoming Commercial Payments Bill would void them outright.”

You do not need to wait for Royal Assent to negotiate like the reform is coming. Many finance teams already know it is.

What about public-sector clients?

If you invoice a public authority — a council, an NHS trust, a government department — the usual limit is already 30 days, and you cannot agree a lower interest rate than the statutory one. The Bill would harden the 30-day public-sector cap further. In practice: quote 30 days, invoice promptly, and chase on day 31 without apology. Public bodies have entire departments for this.

When terms fail: the enforcement ladder

Good terms prevent most disputes; they do not prevent all of them. When a due date passes, work the ladder:

  1. Day 1–3 overdue: friendly reminder. People forget; assume forgetfulness first.
  2. Day 7: firmer nudge citing your terms — “per our agreed terms, payment was due on [date]”.
  3. Day 14: invoke the numbers. Run the interest calculator, add the fixed compensation, and state the total now owed. Most payers settle when the debt starts visibly growing.
  4. Day 21+: pause further work per your clause, and consider a formal letter before action.
  5. Last resort: Money Claims Online (MCOL) via gov.uk.

Our escalation playbook walks through each step with email scripts you can copy.

Quick answers

Can I charge interest if my contract says nothing about late payment? Yes, for business-to-business invoices. Statutory interest under the 1998 Act applies automatically unless your contract sets out its own substantial remedy for late payment.

My client is a private individual, not a business. Am I covered? No — statutory interest only covers B2B debts. For consumer clients, your protection is whatever late-payment clause you wrote into your own contract, which is another reason to write one.

Can a client force 90-day payment terms on me? They can propose them; you do not have to accept. Terms over 60 days are only lawful if fair to both businesses, and the Commercial Payments Bill would void excessive terms. Push back in writing before you start work, not after the invoice goes unpaid.

Which interest rate applies if the Bank of England changes the base rate? The calculation uses the base rate in force when the debt became overdue. As at 14 Oct 2026, with the base rate at 3.75%, statutory interest is 11.75% per annum.

Does the new Bill change anything I should do this week? Not legally — it is not law yet. Practically, yes: the third reading on 20 October is a good forcing event to do the paperwork you have been postponing. Tighten your terms now, and you will be ready whichever way Parliament votes.

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