Invoice Payment Terms Explained: 30, 60 and 90 Days

The Department for Business and Trade estimated in July 2025 that late payment costs the UK economy almost £11bn a year and contributes to around 38 business closures every day. Much of that damage starts before any invoice is overdue, in the payment terms a supplier agrees to in the first place. This guide explains what the common terms mean, what the law allows, and how to stop long terms starving your cash flow.

What net 30, 60 and 90 days mean

Payment terms state how long a customer has to pay after an invoice is issued. "Net" simply means the full amount is due, with no early-settlement discount, within the stated number of days.

• Net 14: payment due 14 days from the invoice date. Common for small trades, freelancers and businesses with weekly costs.
• Net 30: due 30 days from the invoice date. The most common term between UK businesses and the legal default where nothing else is agreed.
• Net 60: due 60 days from the invoice date. Frequently imposed by large companies, retailers and main contractors.
• Net 90: due 90 days from the invoice date. Seen in manufacturing supply chains, export and some corporate procurement.
• 30 days end of month (30 EOM): due 30 days after the end of the month in which the invoice was raised. An invoice dated 3 March falls due on 30 April, giving the customer almost two months of credit.
• Due on receipt: payable immediately, in practice usually within a few days.

Standard UK practice and the 60-day cap

Thirty days remains the norm for business-to-business trade in the UK, and it is also the statutory default. If a contract does not state a term, the Late Payment of Commercial Debts (Interest) Act 1998 treats payment as due 30 days after the later of the invoice or delivery of the goods or services.

For contracts between businesses, the Late Payment of Commercial Debts Regulations 2013 set 60 days as the standard maximum. Longer terms are only enforceable if both parties expressly agree them and they are not "grossly unfair" to the supplier. Public sector bodies must pay within 30 days. In practice, large customers still push for 60, 75 or 90 days, and suppliers often accept because they want the work.

The Office of the Small Business Commissioner runs the Fair Payment Code, a voluntary scheme relaunched in December 2024. It awards three tiers: Gold for paying 95% of invoices within 30 days, Silver for paying 95% within 60 days and 95% of small-business invoices within 30, and Bronze for paying 95% within 60 days. If a prospective customer holds a Gold or Silver award, that is a useful signal before you agree terms with them.

Interest and compensation on late invoices

Once an invoice is overdue, the Late Payment of Commercial Debts (Interest) Act 1998 gives any business a statutory right to charge interest and claim compensation, whether or not the contract mentions it. Guidance is published on gov.uk.

• Statutory interest: 8% a year above the Bank of England base rate, calculated daily from the day after the due date.
• Fixed compensation per invoice: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more.
• Reasonable recovery costs above the fixed sum can also be claimed.

The right exists on paper, but many suppliers never use it because they fear losing the customer. That is a commercial judgement, not a legal one. If you are chasing a debt now, our guide on what to do when a customer does not pay sets out the practical steps.

How to set and state payment terms

Terms only bind a customer if they were agreed before the work was done. Stating them on the invoice alone is too late to change what was already agreed, but it is still essential for clarity. A sensible approach:

1. Agree terms in the contract or quotation

   Put the number of days, the trigger (invoice date or end of month) and the interest clause in your terms and conditions, and get the customer's written acceptance before you start.

2. State them plainly on every invoice

   Show the invoice date, the due date as an actual calendar date, the accepted payment methods and a short note that interest and compensation may be charged under the 1998 Act.

3. Invoice promptly and accurately

   Terms run from the invoice date, so a week's delay in raising the invoice is a week added to your debtor days. Purchase order numbers, correct legal entity names and the right address avoid "we never received it" delays.

4. Chase before the due date

   A courteous reminder a week before payment is due catches queries early. Most late payment starts as an unresolved query, not refusal.

Negotiating terms with large customers

Large companies often present their standard 60 or 90-day terms as non-negotiable. They are usually more flexible than the procurement portal suggests, particularly if you ask before signing rather than after.

• Ask for 30 days and offer a small early-settlement discount (for example 1% for payment within 10 days) if they insist on longer. Price the discount against what the extra credit would cost you.
• Propose staged or milestone invoicing on longer projects so that cash arrives throughout the job rather than at the end.
• Ask whether the customer runs a supply chain finance programme, which can let you draw early payment through their bank.
• Check their Fair Payment Code status and their published payment practice reports (large UK companies must report payment performance twice a year).
• If you must accept 60 or 90 days, build the cost of the credit into your price rather than absorbing it.

What long terms cost your working capital

Credit terms are a loan you make to your customers. The amount tied up at any time is roughly your annual credit sales multiplied by the terms as a fraction of the year. The difference between 30 and 60 days is therefore not a nuisance but a sizeable amount of capital.

Moving from 30 to 60-day terms on £1m of turnover permanently ties up a further £82,000 or so. If customers habitually pay two weeks late, the real figure is higher. That money has to come from somewhere: retained profit, an overdraft, delayed supplier payments or the owner's own pocket. Our guide to calculating working capital shows how to measure the full cycle, including stock and supplier terms.

How invoice finance bridges the gap

Invoice finance exists precisely because of the mismatch between the terms customers demand and the timing of a supplier's own costs. A provider typically advances a large proportion of each approved invoice, often 70% to 90% depending on the provider and sector, soon after it is raised, then pays the balance less its charges when the customer settles. Customers keep their 60 or 90 days; the supplier does not have to wait with them.

It is not free. Providers charge a service fee and a discount charge on funds advanced, and the discount charge grows with every day the invoice stays outstanding, so long terms cost more to finance than short ones. The costs guide explains each charge. Where a customer insists on long terms and the margin can absorb the cost, an invoice factoring or invoice discounting facility can turn an awkward 90-day contract into a workable one. Where the margin cannot, the better answer may be to decline the terms. Our comparison of invoice finance and business loans looks at the alternatives.

Summary and next steps

• Thirty days is standard and the legal default; 60 is the normal ceiling between businesses unless longer terms are expressly agreed and fair.
• Agree terms before work starts, state due dates as calendar dates, and invoice promptly.
• You have a statutory right to 8% over base rate plus fixed compensation on overdue invoices.
• Each extra 30 days of terms ties up roughly 8% of annual credit sales in debtors.
• Invoice finance can bridge long terms, at a cost that rises with the number of days outstanding.

Frequently asked questions