Payment terms might seem like a small detail, but they affect your cash flow significantly. The difference between "Net 30" (you get paid 30 days after invoicing) and "Net 90" (you get paid 90 days after invoicing) is three months of cash you have to fund yourself. If you're a small business or solo consultant, that's real money.
This guide walks through what payment terms to ask for, how to negotiate them, and what happens if the client doesn't pay on time.
Standard payment terms in UK consultancy
Net 30. Invoice issued when work is complete; payment due 30 days later. This is the market standard for most consultancy. It's reasonable: the client gets a month to process and pay, you get cash within a reasonable timeframe.
Net 60 or Net 90. Invoice issued, payment due in 60 or 90 days. This is common with larger corporates and especially with government contracts. It's harder on your cash flow.
Deposit or retainer. A percentage (often 25-50%) upfront, the rest on completion. This protects you if the client doesn't pay. More common in project-based consulting.
Milestone or progress payments. Payment tied to deliverables. "25% on contract signature, 50% on delivery of design, 25% on final approval." This spreads payment and reduces your cash flow burden.
Monthly retainer. A fixed monthly fee for a set number of hours. Common in ongoing consulting relationships. Payment usually due monthly or at the start of the month.
Of these, Net 30 is standard and fair. Anything longer than 60 days is worth pushing back on. A deposit or milestone structure is ideal if you can negotiate it.
What to negotiate
Shorter payment terms. If the client proposes Net 90, push for Net 60 or Net 30. You might say: "Net 90 makes cash flow difficult for a small business. Could we do Net 30? Or if you need longer, could we split the payment into milestones?" Many clients will agree, especially if you explain the impact.
A deposit for upfront costs. If you need to buy materials, book travel, or pay other costs upfront, ask for a deposit. "The project requires £5,000 in upfront costs for travel and software licenses. Could we arrange a deposit of 25% now and the balance on completion?" This isn't unreasonable.
Milestone payments for longer projects. Instead of waiting until the end to get paid, break the project into milestones. "Phase 1 (research and discovery): 30% on completion. Phase 2 (design): 40% on completion. Phase 3 (implementation): 30% on completion." This spreads the cash flow and ties payment to progress.
Faster payment terms for faster settlement. "If you pay within 14 days, you get a 2% discount." Many clients will pay faster to get a discount. This improves your cash flow even if you get slightly less money.
Monthly invoicing for retainer work. If you're on a monthly retainer, arrange to invoice at the start of the month (not the end) and payment due 14 days later. This keeps cash flowing consistently.
Late payment: what to include in your contract
Ideally, clients pay on time. Realistically, some don't. Your contract should address late payment:
Interest on overdue invoices. "Invoices not paid within the agreed terms will incur interest at 8% per annum plus the Bank of England base rate." This is your right under UK law (Late Payment of Commercial Debts (Interest) Act 1998), but it's worth including in the contract to make clear you intend to enforce it.
Payment currency and method. "Invoices must be paid in GBP via bank transfer to the account specified on invoice." This prevents disputes about currency or payment method.
Stopping work for non-payment. "If payment is more than 14 days overdue, the consultant may suspend services until payment is received." This is your leverage if the client isn't paying. Include it in the contract.
Expense reimbursement timeline. "Expenses incurred by the consultant will be reimbursed within 14 days of invoice submission and approved receipts." Don't let the client sit on your expenses claims.
Red flags in payment terms
"Payment within 30 days of client acceptance." This is different from "Net 30." If you deliver work on day 1, and the client takes 60 days to "accept" it, then payment is due day 90. That's much longer than you thought. Push for clear acceptance criteria or a timeline: "Client will notify the consultant of acceptance or required changes within 10 days of delivery. Payment is due 30 days from delivery regardless."
"Payment subject to approval of deliverables." This makes payment conditional on something subjective. Better to say: "Payment is due per the schedule below. Changes to deliverables are subject to [change control process]."
"We reserve the right to offset amounts against other invoices." If the client can deduct what you owe them from what they owe you, that's less leverage for you. Push for clear terms: "Each invoice is standalone. Any disputes will be resolved separately from payment obligations."
"Net 120 or longer." Some large corporates and government bodies push for very long payment terms. If you're a small business, this is painful. If you can't negotiate shorter terms, at least negotiate a deposit or milestone structure to reduce the impact.
Invoicing best practices
Even with the best contract terms, you need to invoice properly:
Invoice promptly. Don't wait. If the project is complete, invoice the same day. The payment clock starts when you invoice, so the faster you invoice, the faster you get paid.
Make invoices easy to process. Include your company name, address, invoice number, date, invoice due date, payment terms, clear description of work, amount, and payment details (bank account, sort code, or company address for cheques). The easier you make it, the faster they process it.
Follow up. If payment is due on day 30, send a reminder on day 25. If it's overdue on day 35, send another reminder. Don't be aggressive, just professional: "Hi [client], just checking in on the status of invoice #123 dated [date], due on [date]. Let me know if you need anything from me."
Use invoicing software. Tools like FreshBooks, Zoho Invoice, or Wave track invoices, send reminders, and give you visibility into who owes what. Worth the small cost.
If the client doesn't pay
If payment becomes significantly overdue (more than 60 days past due), you have options:
Stop work. If the contract allows it (and it should), suspend services until payment is received. Don't continue working for someone who isn't paying.
Escalate. Move from the project manager (who may not control payment) to finance or the engagement lead. The problem often gets resolved faster.
Demand payment with a timeline. "Invoice #123 is now 90 days overdue. We need payment by [date 7-10 days away] or we'll take legal action." This often prompts payment.
Consider debt recovery or court. If the amount is large enough, you can pursue the client through small claims court (up to £10,000) or use a debt recovery service. This costs money and damages the relationship, so it's a last resort.
Take it as a write-off. If the amount is small or recovery isn't worth the effort, sometimes you just accept the loss. Try to learn from it: don't work for this client again without upfront payment.
Getting your contract right
Before you sign a consulting contract, make sure the payment terms are clear and fair. Use QuickLegalCheck to review payment clauses and flag anything that could cause cash flow problems.
Get started today.