Payment terms
Terms of payment
Payment terms set out when an invoice becomes due, how payment is made, what happens if it is disputed and whether early-payment discounts, retention or staged payments apply.
Saved terms stay in this browser. No account or server request is involved.
Simply put
What it means in ordinary work
They describe the money side of the deal: how long the buyer has to pay and what conditions must be met first. Payment terms affect both cash flow and supplier behaviour.
Why it matters
Longer payment terms can support working capital but may raise prices or disadvantage smaller suppliers. Clear terms reduce disputes and late-payment risk.
A hypothetical in practice
A hypothetical contract allows 30 days from receipt of a valid invoice, with a 2 percent discount for payment within 10 days. The buyer models the discount against its cost of funds before choosing whether to use it.
Common pitfalls
A stated payment period may not start until a valid invoice, receipt or acceptance is in place. Define the trigger clearly.
Extending terms without considering supplier financing costs can create hidden price increases or supply risk.
Regional lens
How this lands where you work
The global explanation is canonical. Regional notes are additive, separately sourced and shown with their own review state. They never replace the global meaning.
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As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.