Payment Terms Contract: What to Include & How to Enforce

Why Most Agency Contracts Fail at Payment

I've seen it too many times. An agency does great work, delivers on time, and then spends the next 60 days chasing a check. The client ghosts. The invoice sits unpaid. And when you go back and look at the contract, there's nothing in there with any teeth.

The problem isn't the client. The problem is the contract.

Most service providers copy a generic template off the internet, fill in the dollar amount, and call it a day. They don't think about payment terms until they're already in a dispute. By then, it's too late - you're negotiating from weakness instead of pointing to a signed agreement.

The numbers are brutal. Over half of small businesses surveyed are currently owed money from unpaid invoices, averaging $17,500 per business. Nearly half of all businesses report invoices overdue by more than 30 days - and 64% have invoices sitting 90 days or more past due. This isn't a fringe problem. It's the default state of business if you don't have the right systems in place.

This article is about building payment terms into your contract the right way - before work starts - so you never end up in that position.

I learned this the hard way after building a marketing agency to $600,000 in annual recurring revenue in just 60 days. A deal isn't done when the client agrees to pay you - a deal is done when the money lands in your bank account. I've seen too many agencies deliver great work and then get stuck chasing payments for months because they didn't nail down the payment structure upfront. The contract is your insurance policy, and without clear payment terms, you're essentially loaning your services with no legal recourse.

What Are Payment Terms in a Contract?

Payment terms are the specific conditions under which a client is expected to pay you. They go beyond just "invoice on completion." A well-drafted payment terms section covers:

• When payment is due (Net 15, Net 30, due on receipt, milestone-based)
• How payment is made (ACH, wire, check, credit card)
• What triggers an invoice (project kickoff, deliverable acceptance, monthly retainer date)
• Late payment consequences (interest, work stoppage, collections)
• Deposit or retainer requirements (upfront percentage before work begins)
• Dispute resolution process (what happens if a client contests an invoice)
• Early payment incentives (discounts for paying before the due date)
• Currency and tax obligations (especially important for international clients)

Every single one of these needs to be explicit. "We'll figure it out" is not a payment term. Ambiguity costs you money.

Understanding Common Net Payment Term Structures

Before you can choose the right terms for your contracts, you need to understand what each structure actually means and when each makes sense.

Net 30 (and Its Variants)

Net 30 is the most common payment term in B2B transactions - it means full payment is due within 30 calendar days of the invoice date. Note that it's calendar days, not business days. Weekends and holidays count toward your payment window, which is a simple misunderstanding that creates more payment delays than almost any other factor. If you issue an invoice on June 1st under Net 30 terms, payment is due July 1st regardless of weekends in between.

Variants include Net 15, Net 45, Net 60, and Net 90 depending on your industry and the negotiation. Technology companies often use Net 15, while construction and manufacturing sometimes work on Net 45 or longer. For most agencies and service businesses, Net 30 is the starting point - but that doesn't mean you have to accept it as a ceiling.

Due Upon Receipt

This means the client pays immediately when the invoice arrives. It sounds aggressive, but it's completely reasonable for smaller engagements, one-off projects, or new clients with no track record. If a client balks at this for a straightforward project, that's useful information about how invoice conversations are going to go throughout the relationship.

Net 60 and Net 90

These extended terms are common with large enterprises that operate on lengthy accounts payable cycles. Net 60 doubles your waiting period. Net 90 means your business is effectively financing the client for three months. Before you agree to either, ask yourself honestly whether your cash flow can handle that gap. Many agencies have gone into the red by closing a big deal with terrible payment terms. If a large client insists on Net 60 or Net 90, you have two options: price the extended terms into your fees, or negotiate a shorter window in exchange for some concession they value.

Milestone-Based Payments

For project work, milestone payments are usually the right structure. You break the project into defined phases and invoice at each. This keeps cash flowing throughout the engagement and limits your exposure if a client disappears mid-project. A typical milestone structure for a project-based agency engagement looks like this:

• 50% deposit - before any work begins
• 25% - at project midpoint (design approved, first build phase complete)
• 25% - at final delivery and acceptance

For software development work specifically, a common structure is 30% upfront, 40% on beta completion, and 30% on final delivery and client acceptance. The exact percentages are less important than the principle: never put yourself in a position where a client can take most of the value without paying for it.

Early Payment Discounts: The Carrot to Go With the Stick

Most people spend all their time thinking about late fee penalties. Fewer think about the flip side: early payment incentives. Both belong in a solid payment terms contract.

The most common early payment discount structure is written as "2/10 Net 30." It means the client gets a 2% discount if they pay within 10 days; otherwise, the full invoice amount is due in 30 days. This notation tells the client the discount rate (2%), the discount window (10 days), and the full payment deadline (30 days). You might also see variations like 1/10 Net 30 (1% discount for paying within 10 days) or 2/10 Net 45 for clients on longer standard terms.

On a $10,000 invoice with 2/10 Net 30 terms, a client who pays within 10 days saves $200 and you get your cash 20 days early. For clients who are good at managing their AP, this is genuinely attractive - that 2% discount represents an annualized return of roughly 36.5%, which beats most short-term investment options. So financially sophisticated clients often take these discounts seriously.

For your business, the trade-off is straightforward: you give up 2% of the invoice in exchange for cash in hand 20 days faster and significantly reduced collections headaches. For most agencies, that's a reasonable trade on larger invoices. You can decide whether to offer it universally or selectively based on client history.

Make sure to show the discount terms explicitly on every invoice, not just in the contract. Clients won't chase a discount they don't know about. When it's front and center on the invoice - including the exact dollar amount they'd save and the exact date by which they need to pay - it becomes a concrete incentive rather than fine print.

Here's a tactic I used when scaling my agency: I would offer to do wireframes only for website or app projects, and if the client didn't like where things were headed, we'd refund their money. This worked as both a low-risk entry point and a built-in early payment. The client paid upfront for the wireframes (usually $1,000-$2,000), and if they loved it, we'd continue to the full project at $8,000-$12,000. This structure meant I always had cash flow, and the early discount psychology made clients feel like they were getting a deal when they continued.

The Payment Terms Clauses You Need in Every Contract

1. Deposit Clause

Require a deposit before any work begins. Period. For project-based work, 50% upfront is standard. For retainer-based engagements, the first month is paid before kickoff.

A deposit does two things: it filters out clients who aren't serious, and it ensures you're never doing work you haven't been partially compensated for. If a client pushes back hard on a deposit, that's a red flag about how every future invoice conversation is going to go. New clients especially - if their business is brand new or they haven't been established long, consider requiring a stricter deposit policy rather than extending the same trust you'd give to a client you've worked with for years.

Your clause should read something like: "A non-refundable deposit of 50% of the total project fee is due prior to commencement of any work. Work will not begin until the deposit has cleared."

2. Net Terms (Due Date)

Net 30 has become the industry default, but it's not your obligation to offer it. For smaller agencies and freelancers, Net 15 or even "due upon receipt" is completely reasonable.

Whatever you choose, write it clearly. Don't say "payment due promptly." Say "payment due within 15 calendar days of invoice date." The more specific, the better - courts and collections agencies need dates, not vibes.

Also be explicit about what starts the clock. Net 30 can be measured from the invoice date, the delivery date, or the project completion date. Specify which one. Most disputes about timing come from this exact ambiguity - the client thinks the clock starts when they approve the work; you think it starts when you sent the invoice. Put it in writing.

If you're working with larger enterprise clients who insist on Net 45 or Net 60, consider whether your cash flow can handle that gap before agreeing. If it can't, negotiate: offer Net 45 in exchange for a higher project fee, or require a larger upfront deposit to offset the delayed final payment.

3. Late Payment Penalties

This is the clause most people skip and then regret. A late fee clause communicates that your payment terms are real, not suggestions. It also gives you something to negotiate with - you can waive the late fee as a goodwill gesture on first offense, which ironically builds more loyalty than not having the clause at all.

Most business owners charge between 1.5% and 2% of the invoice amount as a late fee for past-due invoices. A flat fee - typically $25 to $50 - charged after a grace period is another option. Either structure works. Just have something in writing before you send the first invoice.

One legal note: some states restrict the maximum interest rate you can charge. A general safe harbor is to keep rates below 10% annually if you're not sure of the laws in your jurisdiction. Don't describe the late charge as a "penalty" in contract language either - frame it as a financing fee or late payment charge. In some jurisdictions, calling it a penalty can work against you if you end up in court.

Example language: "Invoices unpaid after 15 days from the due date will accrue a late payment fee of 1.5% per month on the outstanding balance."

4. Work Suspension Clause

This one gives you real leverage. If payment isn't received by a certain date, you have the right to pause or suspend all work on the project. No delivered assets, no continued service, no new deliverables until the account is current.

Clients who are slow to pay move much faster when the work stops. You'd be surprised how quickly an "accounting issue" resolves itself when the project is on hold. That 60-day overdue invoice that nobody could seem to find suddenly gets processed within 48 hours once you invoke this clause.

Make sure this clause is explicit: "Failure to render payment by the due date grants [Your Company] the right to suspend all work until the outstanding balance is paid in full. Suspended time does not count against project timelines or delivery commitments."

That last sentence matters. Clients sometimes try to turn a payment dispute into a delivery dispute. If you suspend work because they didn't pay and they then claim you missed a deadline, you want it clearly documented that the suspension was their fault, not yours.

5. Ownership Contingent on Full Payment

This is critical for creative and development work. Intellectual property, code, design files, content - none of it transfers to the client until you've been paid in full. Until then, you own it.

This gives you enormous leverage if payment stalls at the end of a project. Without this clause, a client can theoretically take your work and refuse to pay, and you have almost no recourse. With it, they don't legally own what you built until the check clears.

Language example: "All deliverables, intellectual property, and work product remain the sole property of [Your Company] until full payment has been received. Upon receipt of final payment, ownership transfers to the Client. Client receives a limited license to use deliverables during the project period only, which is revoked upon non-payment."

6. Accepted Payment Methods

Spell out exactly how you accept payment. ACH transfer, credit card, check, wire - whatever you take. Also be explicit about who covers transaction fees if applicable. If a client wants to pay by credit card and you're getting hit with a 3% processing fee on a $10,000 invoice, that's $300 out of your pocket.

ACH payments are often the best option for B2B - they typically carry much smaller fees than credit cards (often under $1 per transaction) and complete within one to three business days. Wire transfers work for larger amounts. Credit cards add convenience for clients but cost you on processing.

You can either build transaction fees into your pricing or pass them along - just make the policy clear in the contract upfront so there's no argument later.

7. Collections and Legal Fees Clause

If an invoice goes seriously delinquent and you have to escalate, you want a clause that says the client is responsible for any collections costs, attorney fees, or court costs incurred in recovering the unpaid balance. This deters bad actors and protects your margins if you do have to pursue legal action.

This clause also signals to the client during contract signing that you take non-payment seriously. Most clients who intend to pay don't even notice this clause. The ones who notice it and push back on it are telling you something important.

8. Dispute Resolution Process

Your contract should define a clear process for what happens when a client contests an invoice. Without it, a dispute can freeze your ability to collect while dragging out indefinitely.

A simple process to include:

1. Client must submit written notice of dispute within 5 business days of invoice receipt
2. Undisputed portions of the invoice must still be paid on time
3. Both parties agree to negotiate in good faith within 10 days of dispute notice
4. If unresolved, disputes go to binding arbitration (specify jurisdiction and rules)

That second point is the most important. Disputing a $500 line item doesn't let the client hold the entire $5,000 invoice hostage. Only the disputed portion is held - the rest is still due. Make that explicit. This single clause prevents the tactic of manufactured disputes being used as a stall tactic.

9. Currency and Tax Obligations

If you work with international clients, specify which currency payments must be made in, how exchange rate risk is handled, and which party bears that risk. This sounds like a detail but it becomes a real problem on larger contracts when currency values shift between project start and payment date.

Also clarify who is responsible for applicable taxes - VAT, GST, withholding tax, or other local obligations depending on where your client is based. This comes up more than you'd think and it's much easier to address it in the contract than to sort it out after an invoice is already disputed.

How to Negotiate Payment Terms with Clients

Knowing what to put in a contract and knowing how to get a client to sign it are two different skills. Here's how to handle the payment terms conversation without it becoming awkward.

Lead with Your Terms, Not the Negotiation

Present your payment terms as a standard part of your process, not as something you're proposing for approval. Include them clearly in your initial proposal and in your contract without framing them as negotiable. Most clients will simply accept what's in front of them if it looks professional and standard.

When you present payment terms as open for debate, you invite a debate. When you present them as how you work, most clients move on. The clients who do push back will push back regardless - at least you're starting from your preferred position instead of caving before they've said a word.

Know What's Non-Negotiable vs. What You Can Trade

Before any negotiation, decide what you won't move on. For me, the deposit requirement is non-negotiable for new clients. The net terms window is more flexible. Whether I accept credit cards can depend on the invoice size.

Having this clarity going in means you can make real concessions on the things that don't matter much to you while holding firm on the things that do. A client who gets Net 45 instead of Net 30 but still has to put down 50% upfront is a client who's better positioned than one who negotiated away the deposit entirely.

Handle the "Our Policy is Net 60" Objection

Larger companies often push back with "our standard AP policy is Net 60" or "our procurement team doesn't approve anything under Net 45." Treat this as a negotiating position, not an immovable fact. Many enterprise AP departments have different terms for professional services versus product purchases, and individual managers often have more flexibility than they let on initially.

A useful response is something like: "I understand enterprise payment cycles. We can work within that framework, though our pricing reflects standard payment windows - extended terms would need to be factored into the overall project cost. Alternatively, we could structure a retainer arrangement that works with your cycles while keeping the project moving." This acknowledges their constraint while keeping your position intact and offering a real alternative.

Document Every Change in Writing

A client says "can we push payment two weeks?" and you say sure. Now you have no written record and no enforceability. Always document changes in writing, even just an email confirmation that both parties reply to. Verbal changes to payment terms are almost impossible to enforce and create he-said-she-said situations that benefit the person who owes money, not the person owed.

Do Basic Due Diligence on New Clients

Before you set final payment terms with a new client, do some homework. How established is the business? How long have they been operating? Do they have a history of paying vendors on time? If a client is brand new, consider requiring stricter terms - a larger deposit, shorter net windows, or payments in advance rather than in arrears. This isn't insulting - it's standard credit policy. Any legitimate client understands it.

When negotiating payment terms, I always lead with what I call a "no-brainer offer" that makes the risk calculation obvious. For example, one client I consulted with was pitching agencies this offer: "Book an extra 28-68 qualified appointments per month, and if we don't hit those numbers in 4 months, you get your money back." The key is making the payment terms conditional on results for the first milestone. This removes the client's biggest objection (what if it doesn't work?) and makes negotiating the payment schedule much easier because you've already de-risked their investment.

The Full Payment Terms Reference: Common Structures Explained

Here's a complete breakdown of every major payment term structure you'll encounter, what each means, and when to use it.

Milestone Payments vs. Monthly Retainers: Which Structure Works When

For project-based work, milestone payments are usually the right structure. You break the project into defined phases - discovery, build, delivery - and invoice at each phase. This keeps cash flowing throughout the project and limits your exposure if a client disappears mid-engagement.

The specific breakdown matters less than the principle. Whether you do 50/25/25 or 30/40/30 or something else, the key is that you're never in a position where you've delivered most of the value and collected little of the payment. Structure your milestones so that your financial exposure decreases as the project progresses, not increases.

For ongoing retainer work, the structure is simpler: invoice on the 1st, due by the 15th, work pauses if not paid. Automate this with a tool like Monday.com or your CRM so the invoice goes out automatically every month without you having to remember. Manual invoicing processes lead to late invoices, which lead to late payments. The more automated and consistent your invoicing is, the more professional it looks and the faster clients process it.

One thing agencies often get wrong with retainers: they invoice in arrears (after the month of work) instead of in advance (before the month begins). The argument for invoicing in advance is strong - you're buying a month of your team's time and focus. Invoice at the start of the engagement period, not at the end. This one structural change eliminates the scenario where a client owes you for work already delivered.

My agencies have tested both structures extensively, and here's what I found: milestone payments work best when you're scaling fast and need to prove value quickly. When we were closing deals at $1,000, then $2,000, then $4,000, and eventually $12,000, we used milestone structures to derisk each step. But once we hit $600,000 in ARR, monthly retainers became the goal because they're predictable. The rule is simple - use milestones when you're proving yourself, switch to retainers once you've proven it.

What to Do When a Client Disputes an Invoice

Your contract should define a clear dispute resolution process. Without it, a dispute can freeze your ability to collect while dragging out indefinitely.

When a dispute comes in, your first move is to determine whether it's legitimate or a stall. Legitimate disputes usually come with specific objections - a deliverable wasn't completed, a scope item wasn't addressed, there's a billing error. Stall disputes are vague: "we're reviewing the invoice internally" or "accounting needs to look at this."

For legitimate disputes, respond quickly. Acknowledge the specific objection in writing, provide your documentation showing the work was done (screenshots, deliverables, communication records), and propose a resolution. Getting specific fast prevents a legitimate dispute from becoming a long-running avoidance situation.

For stall tactics, point to your contract. The dispute resolution clause gives you a defined timeline for resolution - use it. If the client submitted no written dispute within 5 business days of the invoice, note that in writing. If the window has passed and they've acknowledged receiving the invoice without objecting, document that. You're building a paper trail.

The key here: disputing a $500 line item does not let the client hold the entire $5,000 invoice. Only the disputed portion is held - the rest is still due. Make that explicit in your contract and remind them of it politely but clearly when a dispute arises.

I've got a video that walks through exactly what should be in your payment agreement contract, including the free template you can use. When a client disputes an invoice, your contract needs to have already addressed this scenario, or you're negotiating from weakness:

Building Your Collections Process: What Happens When Someone Doesn't Pay

A great payment terms contract is just one piece. The other piece is a documented process for what happens when someone doesn't pay - who sends the follow-up, on what day, in what format, and when you escalate.

Here's a basic collections sequence that works:

Day 1: Invoice Sent

Send the invoice immediately when the trigger event occurs (project delivery, end of month, milestone completion). Don't wait. Every day you delay sending the invoice is a day added to your collections timeline. Use a tool like Close CRM to log the invoice send date and set a follow-up reminder automatically.

Day 15 (for Net 30 terms): Friendly Reminder

Before the invoice is even due, send a brief friendly reminder. Something like: "Just a reminder that invoice #[X] for $[Y] is due on [date]. Let me know if you have any questions or need anything from my end to process payment." This is not aggressive. It's professional. And it dramatically reduces the number of invoices that slip past the due date because they got lost in someone's inbox.

Day 1 Past Due: First Follow-Up

The day after the due date, send a direct email noting the invoice is now past due and requesting payment by a specific date. Keep the tone professional and matter-of-fact. Don't apologize. You did the work; you're owed payment. Reference the contract payment terms in your email so the client knows you're working from a documented agreement.

Day 7 Past Due: Late Fee Notice

If unpaid at one week past due, send formal notice that late fees are accruing per your contract terms. State the exact late fee amount now owed. Keep it factual and calm. This is also the point where you send a brief note internally confirming whether to suspend active work per your work suspension clause.

Day 15 Past Due: Work Suspension and Escalation

Suspend active work. Notify the client in writing that work is suspended per your contract and will resume upon receipt of full payment plus accrued late fees. Send a formal demand letter referencing your contract and giving a final deadline before the matter goes to collections or legal.

Day 30+ Past Due: Collections or Legal

At this point you have options. For amounts under your jurisdiction's small claims limit, filing in small claims court is often the most efficient path. For larger amounts, a collections agency or attorney is warranted. Always document all communications and attempts to collect - this documentation is what makes your case in any legal proceeding.

One important reminder about your collections process: whatever you threaten, actually do. If your contract says late fees apply after 15 days and you never charge them, clients learn that your terms are optional. Enforce your terms consistently, or they stop mattering entirely.

One of the biggest mistakes I made early on was not building a collections process before I needed one. When you're sending 20 emails a day and booking meetings from nearly every batch (I once booked 8 meetings from my first 20 emails, then 4 more from the next 20), you get so focused on closing deals that you forget some of those clients won't pay on time. Build your collections process the same week you close your first client, not the week they miss their first payment. By then, you've already lost leverage.

Common Payment Term Mistakes to Avoid

Vague due dates. "Upon completion" means nothing. Completion of what? Approved by whom? When? Use calendar dates or specific milestone definitions tied to documented acceptance criteria.

No deposit for new clients. You haven't worked with this person before. Requiring a deposit isn't insulting - it's standard. Any legitimate client understands this. The ones who don't are the ones most likely to ghost you at invoice time.

Accepting verbal changes to payment terms. A client says "can we push payment two weeks?" and you say sure. Now you have no written record and no enforceability. Always document changes in writing, even just an email confirmation.

Forgetting about currency and taxes. If you work internationally, specify which currency. Clarify who's responsible for VAT, GST, or other applicable taxes. This comes up more than you'd think.

Not enforcing your own terms. This is the big one. You can have the most airtight payment terms in the world, but if you never enforce them - never charge the late fee, never pause the work, never send to collections - clients learn they can ignore you. Enforce your terms consistently, or they stop mattering.

Invoicing in arrears for retainer work. Billing after the month of service puts you perpetually behind. Invoice in advance. If a client won't pay at the start of a retainer period, they're telling you something about how the relationship is going to go.

Relying on a single payment method. If you only accept checks and a client has an AP system that only processes ACH, your invoice sits in a queue for weeks while everyone figures out the logistics. Accept multiple payment methods and spell out exactly which ones you take.

Using vague language like "reasonable time." Terms like "within a reasonable period" or "industry standard" provide no clear guidance and are essentially unenforceable. Use specific timeframes and measurable criteria every time.

Payment Terms for Specific Agency Situations

When Working with Enterprise Clients

Enterprise clients often have rigid AP systems with specific requirements: purchase order numbers on invoices, specific invoice formats, invoices submitted through a vendor portal, or approval workflows that take 10-15 business days before payment can even be authorized. Find out what their AP requirements are before you submit your first invoice - not after it comes back rejected three weeks later.

For enterprise deals with extended payment terms (Net 60+), build the financing cost into your pricing. If you're offering Net 30 standard and they need Net 60, that's an extra 30 days you're effectively financing their operations. Price that in. The math is simple: if your time-value cost of money is, say, 12% annually, an extra 30 days on a $50,000 invoice costs you about $500. Factor that into your quote.

When Working with Startups

Startups present a different risk profile. They often have genuine cashflow uncertainty, especially early stage ones. Be more cautious here, not less. Require larger deposits, shorter net terms, and consider whether the engagement is worth the risk if you can't get at least 50% upfront.

The flip side: startups that pay well and fast are fantastic clients to grow with. If you establish strong payment norms early in the relationship, they often carry those habits through as the company scales.

When Working Internationally

International clients add layers of complexity. Bank wire fees, currency conversion, payment processing delays, and tax treaty obligations all need to be addressed. Specify payment in your functional currency to eliminate exchange rate risk. Require wire transfers for large amounts rather than credit cards - the processing fees on international card transactions can be significant. Build in extra time for payment processing in your due dates (international wires often take 3-5 business days).

When Working on Subcontract Arrangements

If you're a subcontractor billing a prime contractor, be careful about "pay when paid" clauses - provisions that say the prime contractor doesn't have to pay you until they get paid by their client. These clauses can put you at the end of a payment chain with no control over when money flows. Push back on these when you can. If you can't eliminate them, at least negotiate a cap on how long the delay can last before payment is required regardless of the prime contractor's collection status.

Tools to Automate Payment Terms Enforcement

Having the right contract language is one thing. Having a system that actually executes your payment terms without requiring you to remember every deadline is another. The agencies that collect on time aren't necessarily the ones with the most aggressive terms - they're the ones with the most consistent follow-up systems.

A few tools worth considering:

CRM with invoice tracking. Tools like Close CRM let you log invoice dates, due dates, and follow-up sequences directly in the client record. Set automated reminders so you never have to manually track who owes what.

Recurring invoice automation. For retainer clients, set up automated monthly invoices through your accounting software. B2B businesses that automate their billing report saving significant hours weekly compared to manual invoicing. Automated invoices also go out on exactly the right date every time, which signals professionalism and makes it harder for clients to claim they didn't receive one.

Project management with payment gates. Use Monday.com or a similar tool to build your project phases with explicit payment checkpoints. When a milestone is delivered, the follow-up invoice task triggers automatically. This removes the cognitive load of remembering to invoice and builds payment milestones directly into your project workflow.

Digital contract signing. Contracts that are signed digitally are easier to store, retrieve, and reference in disputes. When a client claims they don't remember agreeing to your late fee policy, you can pull up the signed PDF with a timestamp and their email address attached to the signature in seconds. The signed document is your foundation for every enforcement action.

Get Your Contract Template Right

If you're building your contract from scratch, don't guess. Download the Agency Contract Template I put together - it covers payment terms along with scope, IP, confidentiality, and termination. And if you need something lighter for smaller engagements, the One-Page Contract Template is a fast, clean option that still protects you on payments.

For the actual structure and language, this guide on how to write a contract walks through every section step by step.

And if you're at the proposal stage before the contract even comes up, the Proposal AI Templates I built include payment structure sections that feed naturally into your contract language - so the client has seen your payment expectations before they ever sign anything.

Sample Contract Language for Every Payment Term Clause

Here's complete, usable language for each major clause. Adapt to your situation and have a lawyer review anything you're putting into high-stakes contracts.

Deposit clause: "A non-refundable deposit of 50% of the total project fee ([dollar amount]) is due prior to commencement of any work. Commencement of work is contingent upon deposit receipt. The deposit will be applied to the final invoice."

Net terms clause: "All invoices are payable within 30 calendar days of the invoice date ('Due Date'). The invoice date is the date on which the invoice is transmitted to Client. Payment is considered received on the date funds clear into [Your Company]'s designated account."

Early payment discount clause: "Client may deduct 2% from any invoice paid in full within 10 calendar days of the invoice date. This discount applies to timely payment only and is not applicable to invoices already past due."

Late payment clause: "Invoices not paid by the Due Date will accrue a late payment charge of 1.5% per month (18% per annum) on the outstanding unpaid balance, beginning on the day after the Due Date. [Your Company] may, at its discretion, waive late charges on a case-by-case basis without waiving the right to impose such charges in future billing periods."

Work suspension clause: "In the event of non-payment by the Due Date, [Your Company] reserves the right to suspend all services and deliverables until the outstanding balance, including any accrued late charges, is paid in full. Time lost due to suspension shall not constitute a delay on [Your Company]'s part and does not affect Client's payment obligations."

IP ownership clause: "All work product, deliverables, and intellectual property created by [Your Company] under this Agreement remain the sole and exclusive property of [Your Company] until receipt of full and final payment. Upon receipt of final payment, [Your Company] assigns to Client all right, title, and interest in and to the deliverables. Prior to final payment, Client receives a limited, non-exclusive, revocable license to use deliverables solely for review and approval purposes."

Collections clause: "In the event [Your Company] must take legal action or engage a collections agency to recover unpaid amounts, Client shall be responsible for all costs of collection, including attorney fees, court costs, and collections agency commissions."

Dispute resolution clause: "Client must submit written notice of any invoice dispute within 5 business days of invoice receipt. Failure to submit timely written notice constitutes acceptance of the invoice. Undisputed amounts remain payable by the Due Date. Both parties agree to negotiate disputed amounts in good faith within 10 business days of dispute notice. Unresolved disputes shall be submitted to binding arbitration in [Jurisdiction] under [Arbitration Rules]."

Build the System, Not Just the Contract

A great payment terms contract is just one piece of the puzzle. The other piece is having a clear, documented process for what happens when someone doesn't pay - who sends the follow-up, on what day, in what format, and when you escalate.

Write that process down. If you're working with a team, they need to know the playbook. If it's just you, you still need a checklist so invoices don't slide because you're heads-down on client work. The agencies that consistently get paid on time aren't necessarily working with better clients - they're working the system every single time.

Strong payment terms, clearly written, consistently enforced - that's what separates agencies that have cash flow problems from the ones that don't. The contract sets the expectation. The follow-up system makes it real. Get both right, and chasing invoices stops being a part of your job.

I go deeper on the business systems side of running an agency - including how to structure client agreements and collections processes that actually hold - inside Galadon Gold.