Choosing the right payment term clauses for your business isn’t a one-size-fits-all proposition. It depends on your industry, customers, and needs. 

So, how do you figure out what’s best for you? 

First, consider your industry standards. What are your competitors doing? Look at their invoices and payment terms. This insight can give you a good starting point. You want to be competitive but also ensure your terms protect your business. 

Think about your customers, too. If you’re dealing with large companies, they might expect longer payment terms like net 60 or net 90. If you work with smaller businesses or individuals, shorter terms like net 30 or payment upon receipt might be more appropriate. 

Next, think about your cash flow. How quickly do you need to get paid to cover your expenses? If you have high operating costs, you’ll want shorter payment terms.  

Also, consider the risk of late payments. If you’re working with new customers or in a high-risk industry, consider including strong late payment penalties. 

Finally, consulting with a lawyer or accountant is always a good idea. They can help you understand the legal implications of your payment terms and ensure they align with your business goals. 

RELATED ARTICLE — What Is a Net 45 Invoice? Examples and Tips 

4 Examples of Payment Term Clauses 

What do these term clauses look like in real life? To give you a clearer picture, here are some common examples of payment term clauses for different business scenarios: 

• Service agreement: Payment is due within 30 days of the invoice date (net 30). A 2% discount will be applied for payments made within 10 days of the invoice date (2/10 net 30). A late fee of 1.5% per month will be charged on overdue accounts. 
• Rental agreement: The Renter(s) agree to pay the Landlord rent in the amount of $_____ (the “Rent”) to be paid on or before the first day of every month. Payments made more than 24 hours after the due date are subject to a $_____ late fee. 
• Sales contract: 100% of the total price shall be paid by Buyer to Seller by bank transfer after signing of this agreement before the shipment. 
• Subscription agreement: Monthly payments are automatically debited from the participant’s credit cards. Unless otherwise specified in a subscription, such fees will be billed in advance for each month and are non-refundable. 

Hopefully, these examples will clarify how to write payment terms and conditions in service agreements or subscription contracts.