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Payment Terms
Payment Terms
Definition
The conditions under which a seller expects payment from a buyer.
Overview
Payment terms define when payment is due, accepted payment methods, early payment discounts, and late payment penalties. Clear terms reduce disputes and improve cash flow.
Example
Payment terms: Net 30, 2% discount if paid within 10 days. Late payments subject to 1.5% monthly interest.
Best Practices
Include payment terms on all invoices and contracts. Be specific about due dates and consequences.
Common Mistakes to Avoid
Vague terms
Not enforcing terms consistently
Missing late fee policies
Frequently Asked Questions
What payment terms should I use?
Standard is Net 30, but consider your cash flow needs and industry norms.