Freelance Payment Terms: How to Set Them So You Never Chase a Payment Again

Most freelancers learn about payment terms the hard way — after a client ghosts an invoice. This guide shows you how to set payment terms in a freelance contract that protect your cash flow from the start. With four ready-to-use clause templates you can copy into your next contract today. Or use our payment terms generator to build custom clauses in minutes.

Why Payment Terms Matter More Than Your Rate

Here's a truth most freelancers take too long to learn: your rate doesn't matter if you can't collect it.

You can charge £100 an hour, but if a client pays 60 days late — or disputes the invoice, or ghosts you entirely — that rate is fiction. Payment terms are the mechanism that turns your quoted price into actual money in your bank account.

Good payment terms do three things:

• Protect your cash flow — you know when money is arriving, so you can plan your finances
• Filter out bad clients — clients who push back on fair payment terms are often the ones who'll cause problems later
• Eliminate awkward conversations — when everything is agreed upfront and in writing, chasing a late payment is a contractual matter, not a personal confrontation

The best freelancers don't chase payments. They set terms that make late payment unlikely — and enforceable when it happens. That's exactly what this guide will help you do.

What Payment Terms to Include in Every Contract

Before we dive into the specifics, here's the complete checklist. Every freelance contract should address these payment terms:

1. Payment timeline — when invoices are due (net-15, net-30, or on receipt)
2. Deposit or retainer — how much is due before work begins
3. Milestone schedule — for projects over a certain value, when interim payments are triggered
4. Accepted payment methods — bank transfer, PayPal, Stripe, etc.
5. Currency — especially important for international clients
6. Late payment fees — the interest rate and any fixed penalties for overdue invoices
7. Kill fee / cancellation terms — what happens if the client pulls out mid-project
8. Work suspension clause — your right to pause work if payment is overdue
9. Invoicing schedule — when you'll send invoices (on completion, monthly, per milestone)

Miss any of these, and you're leaving a gap that a difficult client can exploit — usually at the worst possible time. Let's go through the most important ones in detail.

Net-15 vs Net-30 vs Payment on Receipt

The "net" number tells the client how many calendar days they have to pay after receiving your invoice. It's the single most important variable in your payment terms — and the one most freelancers get wrong.

Which Should You Choose?

Net-15 is the sweet spot for most freelancers. It gives clients reasonable time to process payment while keeping your cash flow tight. It's professional without being a pushover.

Payment on receipt works brilliantly for smaller projects (under £1,000) and first-time clients. There's nothing unprofessional about it — you've done the work, you deserve prompt payment.

Net-30 is standard in the corporate world. If you work with agencies or larger companies, you'll probably need to offer it. The trade-off: you're essentially giving clients a 30-day interest-free loan. Offset the risk with a deposit (see below).

Whatever you choose, state the term on every invoice. Don't assume the client remembers what's in the contract. A simple "Payment due within 15 days of invoice date" on each invoice removes any ambiguity.

Deposits and Retainers: Get Paid Before You Start

A deposit is the single most powerful tool in your payment terms arsenal. It does three things at once:

• Proves the client is serious — someone who pays a deposit is committed to the project
• Protects you from total loss — even if they disappear, you've been partly compensated
• Funds your start-up costs — research, planning, and initial work don't come free

How Much Should You Charge?

• 25% — minimum for established clients with a good track record
• 50% — standard for new clients and projects over £2,000. This is the most common and perfectly reasonable
• 100% upfront — appropriate for small, fixed-scope projects (e.g. a single blog post, a logo concept, a one-hour consultation)

For retainer clients, charge the first month's retainer in full before any work begins. This becomes rolling — each month's payment is due before that month's work starts.

Milestone Payments for Larger Projects

For projects over £2,000–£3,000, a single invoice at the end is risky — for both parties. Milestone payments solve this by breaking the total fee into instalments tied to specific deliverables.

A Typical Milestone Structure

For a £5,000 web design project, you might structure payments like this:

• Milestone 1 — Project kick-off: 30% (£1,500) due on contract signing
• Milestone 2 — Design concepts approved: 30% (£1,500) due on approval of wireframes/designs
• Milestone 3 — Development complete: 30% (£1,500) due on delivery of the final build
• Milestone 4 — Launch: 10% (£500) due on project go-live

The exact split depends on your workflow, but the principle stays the same: never have more than 30–40% of the total fee outstanding at any point. If a client stops paying at milestone 2, you've already been compensated for most of the work done.

The Golden Rule of Milestones

No payment, no progress. Your contract should state that work on the next phase doesn't begin until the current milestone payment is received. This isn't aggressive — it's how every professional services firm operates. Builders don't lay the roof before the foundation is paid for.

Late Fee Clauses That Actually Deter Late Payment

A late fee clause isn't just about collecting extra money — although you're entitled to it. Its real value is psychological deterrence. Clients who know there's a financial consequence for paying late tend to prioritise your invoice.

What to Include in Your Late Fee Clause

• Interest rate: In the UK, you can charge 8% above the Bank of England base rate under the Late Payment of Commercial Debts Act 1998 (use our calculator to see exact amounts). Alternatively, set a contractual rate of 1.5–2% per month.
• Fixed compensation: Under UK statute, you can claim £40–£100 per overdue invoice depending on the debt size. You can also set a flat administrative fee in your contract.
• Grace period: Optionally, specify a short grace period (e.g. 3–5 days) before interest starts accruing. This shows goodwill while keeping the deterrent.
• Work suspension: State clearly that you reserve the right to pause all ongoing work if any invoice is overdue beyond a specified number of days.

The most important thing? Actually enforce it. A late fee clause you never use trains clients to ignore your payment terms. You don't have to charge it every time — but you need to be willing to. See our full guide on how to add late fees to freelance invoices.

Kill Fees: Protecting Yourself from Cancellations

A kill fee (also called a cancellation fee) protects you when a client pulls the plug on a project after you've already committed time, turned down other work, or begun delivering.

Without a kill fee clause, a client can cancel mid-project and you might receive nothing for the time you've blocked out and the opportunities you've turned down.

How Kill Fees Typically Work

• Cancellation before work begins: Deposit is non-refundable (or 25% of total fee if no deposit was taken)
• Cancellation during the project: Payment for all completed work, plus 25–50% of the remaining project fee
• Cancellation after final delivery: Full project fee is due — the work is done

Kill fees are standard in publishing, design, and creative industries. They're not a penalty — they're fair compensation for blocked time, lost opportunities, and work already delivered.

How to Communicate Payment Terms to Clients

The best payment terms in the world are useless if the client doesn't know about them until the invoice lands. Here's how to set expectations early — and avoid the most common freelancer mistake of burying terms in the fine print.

1. Raise It in the Proposal or Discovery Call

Don't wait for the contract. Mention your payment structure when you discuss the project scope and price. Something as simple as:

"My standard terms are 50% deposit before we kick off, then the remaining 50% on delivery, due within 15 days. Does that work for your team?"

This normalises the conversation and gives the client a chance to raise concerns before anything is signed.

2. Make It Crystal Clear in the Contract

Payment terms should have their own clearly labelled section — not buried inside general terms and conditions. Use plain language. Specify amounts, dates, and consequences.

3. Walk Through the Contract, Don't Just Send It

When sending the contract for signature, highlight the payment section in your email: "I've attached the project agreement — please note the payment schedule in Section 4, including the deposit and milestone dates." This eliminates any "I didn't see that" excuses later.

4. Restate Terms on Every Invoice

Each invoice should include: the due date, accepted payment methods, and a note about late fees. Repetition isn't nagging — it's professionalism.

5. Send a Friendly Heads-Up Before the Due Date

A brief polite reminder 2–3 days before the invoice is due can prevent a late payment entirely. Many clients genuinely forget — a nudge is all it takes.

4 Ready-to-Use Contract Clause Templates

Copy these directly into your freelance contract and adapt the bracketed sections to your specifics. Each clause is written in plain, enforceable language.

Clause 1: Payment Schedule & Net Terms

Clause 2: Late Payment Fees & Work Suspension

Clause 3: Milestone Payment Schedule

Clause 4: Kill Fee / Cancellation Terms

Frequently Asked Questions

What payment terms should I include in a freelance contract?

At minimum: payment timeline (net-15, net-30, or on receipt), deposit requirements, accepted payment methods, late fee terms, and cancellation/kill fee provisions. For larger projects, add milestone payment schedules. The more specific you are, the fewer disputes you'll face.

Should I use net-15 or net-30 as a freelancer?

Net-15 is generally better for freelancers. It keeps cash flowing faster and reduces the risk of invoices being forgotten. Offer net-30 for corporate clients who need it — but pair it with a deposit to offset the longer wait.

How much deposit should a freelancer charge upfront?

Between 25% and 50% is standard. For new clients or high-value projects, 50% is perfectly reasonable and expected. For small, fixed-scope projects, consider charging 100% upfront.

What is a kill fee in a freelance contract?

A kill fee compensates you if the client cancels the project after you've committed time or begun work. Typical structures: non-refundable deposit if cancelled before work starts, payment for completed work plus 25–50% of the remaining fee if cancelled mid-project, and full fee if cancelled after delivery.

Can I charge late fees on freelance invoices in the UK?

Yes — and you have a statutory right to do so. The Late Payment of Commercial Debts Act 1998 entitles you to charge 8% above the Bank of England base rate plus fixed compensation of £40–£100 on overdue B2B invoices. A contract clause makes enforcement smoother.

How do I communicate payment terms to a new client?

Raise them early — in the proposal or discovery call, not just the contract. Walk through the payment schedule verbally, highlight the relevant contract section in your email, and restate the terms on every invoice. Clarity upfront prevents conflict later.

Stop Chasing — Start Automating

Setting clear payment terms is step one. But even the best contract can't guarantee every client pays on time. When they don't, you need a system — not a stack of drafted-and-deleted reminder emails.

Want the clause templates from this guide — plus five additional clauses for scope changes, IP retention, and expense reimbursement? The Contract Payment Clause Templates pack gives you nine professionally written, ready-to-use clauses for just £12.

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Written by the team at Landolio — tools and templates for freelancers who'd rather do great work than chase payments.