Standard UK payment terms
Payment terms describe the period within which a customer is expected to pay an invoice. The most common terms in the UK are 30 days from invoice date, though many large businesses impose their own standard terms of 60 or 90 days on suppliers.
Under the Late Payment of Commercial Debts Regulations 2013, public sector buyers must pay within 30 days. Private sector payment terms are negotiable, but if no terms are agreed the statutory default is 30 days.
- Net 30: payment due 30 days from invoice date
- Net 60: payment due 60 days from invoice date
- EOM 30: payment due 30 days after the end of the month the invoice was issued
- Due on receipt: immediate payment expected (common for B2C or high-value one-off transactions)
- 2/10 Net 30: 2% discount if paid within 10 days, otherwise net in 30 days
Negotiating payment terms with large buyers
Large retailers and corporates often impose their own standard terms on suppliers, sometimes 60, 90 or even 120 days. While you can negotiate, the power imbalance is real. If you accept long payment terms with large buyers, invoice finance can effectively neutralise the impact on your cash flow by advancing funds immediately after each invoice is raised.
When negotiating, consider whether early payment discounts (also called supply chain finance or reverse factoring arrangements) are available through the buyer's own finance programme.
Frequently Asked Questions
Can I charge interest if a customer ignores my payment terms?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest of 8% over base rate from the day after the due date, plus a fixed compensation charge.
What are the maximum payment terms allowed under UK law?
For public sector contracts, maximum terms are 30 days. For private sector contracts, terms cannot exceed 60 days unless specifically agreed and not grossly unfair to the supplier, under the Late Payment Regulations.