UK Invoice Payment Terms Explained: Net 30, EOM, and More

Payment terms are the rules on your invoice that say when you get paid. The exact wording matters, because "net 30", "EOM", and "due on receipt" all set a different deadline, and the wrong shorthand can cost you weeks of cash flow. This page is a plain-English reference to the terms you will actually see on UK invoices, what each one means precisely, and which ones are worth using.

1. The most common UK payment terms, defined

Each entry below is written to stand on its own. The table is the quickest reference, and the notes underneath cover the terms that are most often misread.

A few of these are misread often enough to be worth spelling out. Net simply means the net total owed, so "net 30" is the full amount in 30 days, not a discounted figure. The number after it is always a count of days, and unless the invoice says otherwise those days run from the invoice date, not the date the client happens to open it.

EOM trips people up the most. It moves the starting line to the end of the month the invoice is dated in. An invoice dated 5 March on EOM 30 terms is due 30 April, because the 30 days only start counting once March has ended. That can add up to a full extra month compared with a plain net 30.

PIA and COD sit at the safe end. Payment in advance means nothing ships or starts until you are paid, and cash on delivery means payment lands as the work or goods change hands. Both remove credit risk entirely, which is why they suit new or higher-risk clients where a deposit alone would not cover you.

2. What happens if you don't specify a payment term

If you agree no payment term at all, UK law does not leave you with nothing. For business-to-business transactions, the Late Payment of Commercial Debts (Interest) Act 1998 implies a default term of 30 days. You do not need a signed contract for this to apply.

The 30 days run from the later of two dates: the day the client receives the invoice, or the day the goods or services are delivered. Once that period passes, the invoice is legally late and statutory interest can begin to accrue.

The default is a safety net, not a target. Relying on it means giving every client a full 30 days by accident, so it is almost always better to state a shorter term explicitly than to fall back on what the law implies.

3. Early payment discount terms explained (2/10 Net 30)

An early payment discount rewards a client for paying ahead of the deadline. The shorthand 2/10 net 30 reads as "2% off if you pay within 10 days, otherwise the full amount within 30 days". The first number is the discount, the second is the window to earn it, and "net 30" is the fallback deadline.

The maths is worth understanding before you offer one, because a small discount is more expensive than it looks. On a £1,000 invoice, a 2% discount is £20. You are giving up £20 to be paid 20 days sooner, on the day-10 deadline instead of day 30.

Annualised, that works out at roughly 37% a year. The calculation is (2 ÷ 98) × (365 ÷ 20), because you sacrifice 2% of the 98% you would otherwise collect, over the 20 days you brought the payment forward. Framed that way, offering 2/10 net 30 is like paying 37% interest to borrow your own money for three weeks.

4. Which payment terms should freelancers and small businesses use

Net 30 became the default because it suits large buyers with monthly payment runs. For a freelancer or small business, 30 days is often too generous, because it means fronting a month of your own cash on every job before any money arrives.

Shorter terms are usually the better call. Net 14 or net 7 keeps your cash cycle tight and gives you an earlier warning sign if a client is going to be difficult. For anything larger, splitting the fee into staged milestone payments means you are never carrying the whole project unpaid at once.

Match the term to the risk. A trusted repeat client can have net 30 if it helps you win the work, but a new or unfamiliar client is exactly where a deposit, shorter terms, or staged invoicing earn their keep. Our guide to credit checking a client before invoicing covers how to judge that risk, including when staged payments are the safer structure.

Whatever term you choose, work out exactly when it falls due with our free invoice due date calculator, which also shows the first day statutory interest becomes chargeable.

5. How to state your payment terms clearly on an invoice

Terms only protect you if they are unambiguous. Put them on the invoice itself, not buried in a separate document, and repeat them in the email or quote before the work starts so there is no argument later about what was agreed.

State a real date wherever you can. "Payment due by 30 April 2026" leaves no room for interpretation, whereas "net 30" still requires the client to count. If you do use shorthand, name the start point too, such as "net 14 from invoice date".

Avoid vague phrasing altogether. Terms like "prompt payment" or "payment on completion" are not enforceable deadlines, because they set no date for interest to run from. A specific number of days, or an actual calendar date, is what makes a term stick.

Doing this by hand on every invoice is where mistakes creep in. Accounting software such as Sage^(affiliate) lets you set default payment terms once and applies them to every invoice automatically, with the due date calculated for you rather than typed in each time.

6. FAQ