What Payment Terms Should I Use?

Start with your cash-flow reality

Payment terms are simply the window a customer has to pay you, and the right length depends on three things: your own cash-flow needs, what is normal in your industry, and how much you trust the customer. A business that pays wages weekly cannot comfortably carry a lot of 30-day debtors without a cash buffer, so your terms have to fit how money actually moves through your business, not just what looks generous on a quote.

As a rough guide, shorter terms suit smaller, one-off jobs where the work is fresh in the customer's mind and the amount is easy to pay. Longer terms suit ongoing relationships with reliable payers who have earned the extra room. If you are unsure, start short — it is far easier to extend terms for a good customer who asks than to claw them back from a slow one who has grown used to paying late.

Common term lengths and who they suit

There is no single right answer, but a few patterns suit most Australian small businesses. Use these as a starting point, then adjust for the customer in front of you.

7 days

Small discrete jobs — trades, cleaning, couriers — and any new customer with no track record. The amount is usually low and the work is fresh, so most people pay promptly.

14 days

Most professional services, consulting, creative and IT work. Short enough to stay near the top of the accounts-payable queue, long enough to feel reasonable to an established client.

30 days (net 30)

Ongoing relationships, larger corporates and government. You are lending the customer money interest-free for a month, so build that cost into your pricing.

You can use our payment terms generator to draft a clear set of terms once you have chosen a length.

When a deposit beats long terms

For project work, high-value orders or first-time customers, a deposit plus balance often serves you better than any single term length. Asking for 25 to 50 per cent upfront confirms the customer is serious, funds your early costs, and cuts your exposure if things go wrong partway through.

Deposits are completely normal in fit-outs, custom manufacturing and large creative projects, so asking for one rarely surprises a genuine buyer. They are not rude — they are a standard commercial practice that protects both sides, because the customer also gets a supplier who is properly resourced to start. Pair a deposit with short terms on the balance and you carry very little risk: the bulk of your costs are covered before you begin, and the remaining amount falls due quickly once the work is done.

Set a default, then vary it

Pick one default term — say 14 days — and apply it to every new customer so you are not negotiating from scratch each time. Then vary it deliberately rather than by accident: a longer term for a proven, high-volume account that always pays; a shorter term or a deposit for anyone whose risk you cannot yet judge. Writing the default into your terms of trade means it applies automatically unless you and the customer agree something different in writing.

Whatever you settle on, agree it before work starts, not after. Terms a customer never saw or accepted are hard to enforce if they later dispute the bill, so capture them in your quote and have the customer accept that quote in writing. A short email confirming "yes, go ahead on those terms" is usually enough to make the term part of your agreement.