What are the default payment terms in the UK if my contract says nothing?

Thirty days, under the Late Payment of Commercial Debts (Interest) Act 1998, counted from the latest of three dates — when the client received the invoice, when they received the goods or services, or when they verified or accepted them. That third limb matters more than agencies expect, because a client with a formal sign-off step can push the start of the clock later than the invoice date.

Can a client insist on 90-day payment terms?

They can ask, and you can agree, but the position is more arguable than most agencies realise. A business-to-business payment period longer than 60 days is only enforceable if it is not grossly unfair to the supplier, judged against good commercial practice and the nature of the goods or services. Where the buyer is a public authority the ceiling is 30 days.

Should I ask for a deposit or payment up front?

On project work, yes — it is the single most effective term you can change. A deposit converts an unknown client into a partially proven one before you incur cost, and a client who will not pay a deposit is telling you something useful for free. On retainers, invoice in advance of the month rather than in arrears.

Is it worth putting a late payment clause in the contract?

Yes, but not because it creates the right — statutory interest applies whether or not you write it down. A clause is worth having because it means nobody is surprised when you raise it, which is what makes raising it survivable. Be careful not to write a clause that gives the client a better deal than the Act does, because that is what you will be held to.

Payment terms that actually get paid, on a UK agency invoice

Most agency invoices say "30 days" because that is what the accounting software put in the box. Nobody chose it, nobody checked it against the cash position, and nobody has read what the law does when the contract is silent.

Terms are the cheapest lever in credit control, because changing them costs nothing and applies to every future invoice at once. Here is what to put on the paperwork and why.

What the law gives you when you say nothing

The Late Payment of Commercial Debts (Interest) Act 1998 fills the silence. Where a business-to-business contract does not fix a payment period, the default is 30 days, counted from the latest of:

the date the client received the invoice;
the date they received the goods or services;
the date they verified or accepted them.

That third limb is the trap. If the client has a sign-off step, and the contract makes payment contingent on it, the clock may not start on the date you put on the invoice. Agencies with formal client approval processes should either pin the payment date to the invoice date explicitly, or accept that their real terms are longer than they think.

Two ceilings sit above all this. A B2B payment period longer than 60 days is enforceable only if it is not grossly unfair to the supplier. Where the buyer is a public authority, the ceiling is 30 days. And the Commercial Payments Bill proposes making terms beyond those limits void outright rather than merely challengeable — nothing to act on today, but the direction of travel is one way, and it is worth knowing when a client's procurement team pushes 90 days at you.

The six fields that decide whether you can be paid

Before the terms matter at all, the invoice has to be payable. At a mid-sized client, an invoice missing any of these is not rejected — it is silently parked, which looks exactly like being ignored.

The right legal entity. Group companies pay from the entity named on the purchase order. Invoice the trading name and their system cannot match it.

A purchase order number, where the client uses them. Above a threshold that varies by client, no PO means no payment, full stop. Ask at quoting time, not at chasing time.

The payer's contact, not the buyer's. The person who briefed the work is almost never the person who pays for it. Get the accounts contact when you quote, and send to both.

Line items a stranger can understand. "Retainer — March" is fine. "Phase 2 continued" invites a query from somebody who was not in the meeting, and a query is a month.

A single, unambiguous due date. Not "30 days" — the actual date. Finance systems and humans both handle a date better than an arithmetic problem.

How to pay, on the invoice itself. Account details, reference to quote, and a link if you have one. Every extra step between reading the invoice and paying it is a place for the process to stall.

The terms worth choosing on purpose

Invoice retainers in advance. Monthly retainers billed in arrears are the most common structural cash problem in agencies: you have funded a month of salaries before you have asked for a penny. Billing on the 1st for the month ahead moves your whole cash position forward by a month, permanently, and almost no client objects if it is set that way from the start.

Take a deposit on project work. A third up front is standard and does two jobs. It funds the work, and it tells you something true about the client before you have incurred cost. A client who will not pay a deposit has given you extremely useful information for free.

Shorten the terms, don't lengthen the ladder. Fourteen days is a perfectly normal agency term and is not aggressive. The instinct to offer long terms to win work is usually a discount you never priced.

Say what happens when it is late. Not as a threat — as a term. Something like: "Payment is due within 14 days of the invoice date. Overdue amounts carry statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998." One sentence, and it means that when you raise interest later, you are pointing at the contract rather than introducing a new idea.

Be careful writing something more elaborate. If your clause gives the client a better deal than the statute — a lower rate, a longer grace period — that is what you are held to. The Act only rescues you where your clause fails to provide a substantial remedy of its own. When in doubt, refer to the Act rather than restating it.

Include a suspension right if you want one. Many agencies threaten to stop work without having the right to. Stopping work without a clause may itself be a breach. Put it in, and give notice in writing before acting on it.

What not to bother with

Early payment discounts. A 2% discount for paying in 10 days rather than 30 is an annualised cost of roughly 37% — you are borrowing your own money at credit-card rates. There are moments when that trade makes sense, but a standing policy is not one of them. The statutory interest you are already entitled to costs you nothing.

Elaborate escalating penalty schedules. They read as adversarial to clients, they rarely survive scrutiny, and the statutory position is stronger than anything you will draft.

Terms nobody enforces. The most damaging thing on an invoice is a term you have never once acted on. It teaches every client who tests it that your paperwork is decorative.

The order to fix them in

If you are going to change one thing, change when you invoice retainers. Advance rather than arrears is a one-off, one-month improvement to your cash position that applies forever and costs nothing.

If you are going to change two, add the pre-due note three days before the date — not a term, but it belongs to the same job, and it catches every invoice that went to the wrong place while that is still free to fix.

Everything after that is the chase itself, and the uncomfortable truth that most late payment is a process failure rather than a terms failure.

General information on UK business-to-business terms, not legal advice on your contract. Get a solicitor to look at your standard terms once — it is a few hundred pounds against every invoice you will ever raise.