What it is
Payment terms specify how much, when, and how you're paid: invoice cycles, due dates (net-30, net-60, net-90), late fees, dispute windows, and what counts as a valid invoice. Long payment terms function as zero-interest loans you give the client.
Why it matters
A net-90 contract on a $20,000 project means you finance $20,000 of the client's operations for three months. Late fee clauses, dispute windows, and 'pay-when-paid' language can stretch that even further.
Sample clause language
"Client shall pay all undisputed invoices within ninety (90) days of receipt. Client may dispute any portion of an invoice within thirty (30) days; disputed amounts shall not be due until resolved."
What it really means: Net-90 with a 30-day dispute window means you might wait 4+ months. Push for net-30, with a tight dispute window and late-payment interest.
Red flags
- Net-60 or longer
- No late-payment interest
- Long or undefined dispute resolution window
- 'Pay when paid' (you're paid only when client's customer pays)
- Required milestones the client controls
Fair / acceptable
- Net-15 or net-30
- 1.5%/month late interest
- Defined invoice format and dispute window (10 days)
- Deposit upfront
How to negotiate
- Insist on net-30 or shorter
- Add late-payment interest of 1.5%/month
- Require a 25–50% deposit
- Cap dispute window at 10 days
Frequently asked questions
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Not legal advice. For informational purposes only.