Payment terms for a one-person trade business

Terms belong on the quote, not the invoice

This is the whole thing in one sentence. The contract is formed when the customer accepts your quote. Anything you add afterwards, on the invoice, is a new term you are proposing on your own after the deal was done, and the customer has not agreed to it.

That matters most for the things you would actually want to rely on: a deposit, a stage payment, interest on late payment, a charge for materials if they cancel. All of those are enforceable if they were on the quote the customer said yes to. None of them are reliably enforceable if they first appeared at the bottom of the invoice.

It costs one line. Put the payment period, the deposit and what happens if it goes past the period on every quote you send, and get the acceptance in writing, even if the writing is a text message saying go ahead.

What period to actually use

There is no right answer, but there are norms, and being far outside them invites a conversation you do not want to have.

On domestic work, payment on completion is common and entirely reasonable. If you invoice instead, seven or fourteen days is normal. Thirty days on a domestic job is a period you have chosen to give away, and householders do not expect it.

On commercial work you will often be given the customer's terms rather than asked for yours. Thirty days is the standard. Sixty is common with larger contractors and is at the edge of what the law will support: between businesses, a period over 60 days is open to challenge unless it was expressly agreed and is not grossly unfair to the supplier. For a public authority, 30 days is the legal maximum and cannot be extended.

If you agree nothing at all on a business job, the default is 30 days from the later of the day the work was done and the day the customer received your invoice. Which means an invoice you sent late starts its own clock late.

• Payment on completion, for short domestic jobs.
• Seven days, for domestic jobs you invoice afterwards.
• Fourteen days, the standard middle ground and the one to default to.
• Thirty days, for commercial customers who expect it.
• Deposit plus stages plus balance, for anything running more than a week or with real material costs in it.

The rule almost nobody in the trades knows about

If you agree a job at the customer's home, which is how most domestic trade work is agreed, the contract is what the Consumer Contracts Regulations 2013 call an off-premises contract. The customer gets 14 days to cancel it, for any reason, and you have to tell them so in writing before the work starts.

If you want to start inside those 14 days, and usually you do, you need the customer's express request to begin, given in a durable form. A line on the quote that they sign or reply to accepting is enough. Without it, a customer who cancels partway through may not have to pay you for the work already done, and you will have no way round it.

This is not obscure. It is the most common way a tradesperson ends up unable to charge for work genuinely carried out, and it costs a sentence on the quote to avoid.

Say how to pay, and make it the easy option

Put the bank details and a payment reference on the quote and on the invoice. An invoice that makes the customer ask how to pay has added a step, and steps are where invoices go to sit for a fortnight.

Bank transfer is the right default for a trade business: it is free, it is instant, and it leaves a record with your reference on it. If you take cards, be aware that you cannot add a surcharge for a consumer debit or credit card payment. Surcharging consumer cards has been banned in the UK since 2018, so the card fee has to be inside your price rather than added at the end.

Whatever you accept, name it. Vagueness about payment reads as vagueness about the business, and it is one of the cheapest impressions to fix.

The terms line, ready to paste

Adapt the numbers, keep the structure. This is written for a domestic job agreed at the customer's home, which is the hardest case; strip the cancellation paragraph for commercial work.

Payment terms

This quote is valid for 30 days from the date above.

A deposit of [amount or %] is payable before work starts. The deposit covers materials ordered for this job and is non-refundable once those materials have been ordered.

[For jobs over a week:] Stage payments of [amount] are due on [milestone] and [milestone].

The balance is due within 14 days of the date of the final invoice.

If payment is not received within 14 days, interest may be charged at [rate]% per year on the outstanding balance from the due date until payment is received.

Payment by bank transfer to:
    Account name: [account name]
    Sort code: [sort code]
    Account number: [account number]
    Reference: [quote or invoice number]

Cancellation

Because this agreement was made at your home, you have the right to cancel within 14 days without giving a reason.

If you would like work to start before the end of that 14 day period, please confirm by replying to this quote. If you then cancel, you will be charged for the work carried out and materials supplied up to the point of cancellation.

Accepting this quote

Please reply to this email or message confirming that you accept this quote and its terms, and whether you would like work to start before the end of the cancellation period.

Terms only work if you enforce them once

A fourteen day term you never mention on day fifteen is a thirty day term, and the customer has learned which one is real. You do not have to be aggressive about it. A short message on the day after the due date, sent every time, is what makes the number mean something.

That is also the argument for automating it. The reminder that goes out on the same day every time, without you deciding whether today is the day to be the person who chases, is the one that actually holds the term.

Common questions

What payment terms should a sole trader use?

Fourteen days is the sensible default for invoiced work, and payment on completion is normal and reasonable for short domestic jobs. Thirty days is standard on commercial work but is a long time to fund out of your own pocket, so use it because a customer requires it rather than by habit.

What happens if I do not state a payment term?

On a business-to-business job the statutory default is 30 days, counted from the later of the day the work was done and the day the customer received the invoice. On a domestic job you have no default period to fall back on, which makes proving the payment is late considerably harder.

Can I put payment terms on the invoice instead of the quote?

You can print them there, but the contract was formed when the customer accepted the quote, so a term appearing for the first time on the invoice is a proposal rather than an agreement. Anything you want to be able to rely on, particularly a deposit, a cancellation charge or interest, needs to be on the quote.

Do I have to give a homeowner 14 days to cancel?

If the agreement was made at their home or anywhere away from your own business premises, yes, the Consumer Contracts Regulations 2013 give them 14 days to cancel and require you to tell them in writing. To start work inside that period you need their express request to begin, in a durable form such as a written reply to your quote.

Can I charge a card fee to cover the processing cost?

Not to a consumer. Surcharging consumer debit and credit cards has been banned in the UK since 2018, so the cost of accepting cards has to be built into your prices rather than added at the point of payment.

Do the maths

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More on getting paid

• Letter before action for an unpaid invoiceA free letter before action template for UK tradespeople owed money, what the pre-action rules require you to enclose, and how long to give them to pay.
• Taking a customer to the small claims court over an unpaid invoiceHow to claim an unpaid invoice through the county court, what the fees are, how long it takes, and the part nobody mentions: winning is not the same as being paid.
• Charging interest on a late invoiceUK statutory interest is the Bank of England base rate plus 8% on business debts, with a fixed sum per invoice on top. When you can charge it, when you cannot, and how to work it out.
• How to chase an invoice without losing the customerThe wording and timing that get an overdue invoice paid without damaging a customer relationship, plus what to do when the invoice is stuck inside a company.
• When a main contractor will not pay youThe Construction Act gives subcontractors payment notices, a right to suspend work and adjudication in 28 days. What it covers, what it does not, and how to use it.
• Retention, and how to actually get it backWhat retention is, the usual 3% to 5% and when each half is released, why subcontractors lose it, and the practical steps that get it paid back to you.
• Checking a customer will pay, before you startThe free Companies House checks that take five minutes, the red flags worth walking away from, and how to protect yourself on domestic work where no credit check exists.
• Stage payments, and how to structure themHow to split a job into stage payments a customer will agree to, what makes a milestone enforceable, and why the money should always be slightly ahead of the work.
• Should you put an unpaid invoice with a debt collection agency?What debt collection agencies charge, when a third-party letter works better than yours, and when a free letter before action does the same job for nothing.
• Writing off an unpaid invoiceWhether you can claim tax relief on a bad debt depends on which accounting basis you use, and most sole traders are now on the one where there is nothing to claim.

All of it, in the order you need it, on the getting paid hub.

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