Payment Terms For Trade Work

Your payment terms are whatever you agree in writing before the work starts. If you agree nothing, a commercial customer’s payment becomes late 30 days after they receive your invoice or you finish the work, whichever is later, and you pick up a statutory right to interest and compensation. Agreed terms can run to 30 days for public authorities and 60 days for businesses, and longer than 60 days is possible business to business but has to be fair to both. On domestic work none of that applies automatically, so the terms you write are the only ones you get.

Two different worlds

Trades work in two legal worlds and the terms that matter are different in each.

Commercial work covers subcontracting, developers, letting agents, commercial clients. The Late Payment of Commercial Debts (Interest) Act 1998 puts a floor under you: statutory interest and fixed compensation, whether or not your terms mention them. If the job is a construction contract in scope of the Construction Act, you also get stage payments, notice deadlines and a right to suspend. Construction Act payment terms covers that side.

Domestic work means a homeowner in the house they live in. Neither Act helps you. Section 106 of the Construction Act excludes residential occupiers, and the Late Payment Act only covers commercial debts. Deposits, stage payments, late interest: if you want any of it, it has to be in your written terms, and it has to be fair to be enforceable against a consumer.

Which produces a result most people get backwards. Written terms matter *more* on domestic jobs than commercial ones, because there’s no statutory floor underneath you when it goes wrong.

What the defaults are

Where nothing is agreed on a commercial job:

Where terms are agreed, the ceiling is 30 days for public authorities and 60 days for business transactions. Longer than 60 days business to business is possible, but in gov.uk’s words *”it must be fair to both businesses.”*

The terms worth setting

A payment period, written as a number of days. 14 or 30 is normal for trade work, and shorter is fine if the customer accepts it. Then put an actual date on every invoice, because “30 days” invites an argument about when the clock started.

A deposit, for jobs with material outlay up front. State the amount or percentage, when it’s payable and what it covers. Be careful taking big deposits off consumers, because that’s an area where fairness gets looked at closely.

Stage payments on longer jobs, tied to a defined milestone rather than a date, so a delay you didn’t cause doesn’t trigger a payment you can’t justify. On commercial construction work running over 45 days you’ve got a statutory right to these anyway under s109.

Late payment interest. On commercial work the statutory right is already there, but note what happens if your terms set a different rate: yours applies instead. Specifying a lower rate than the statutory one costs you money for no reason. On domestic work, if you want interest at all, you have to write it in.

How variations get handled, meaning how extra work is priced and approved, ideally in writing before anyone does it.

Retention of title on materials, so they stay yours until they’re paid for.

And who the contract is actually with. Name the paying entity properly. “The customer” isn’t a legal person, and a limited company that turns out to be a different company from the one you dealt with is a genuine problem when you want your money.

Worked example

A rewire for a homeowner, £8,400, three weeks.

Terms agreed in writing before starting: £2,000 deposit on acceptance covering cable and the consumer unit, £3,200 on completion of first fix, £3,200 on completion, testing and certification. Payment within 14 days of each invoice. Interest at 8% above base rate on late payment. Materials remain the contractor’s property until paid in full.

None of that is automatic on a domestic job. Without those terms the position is: no deposit, no stage payments, no interest. Invoice at the end and hope.

Common mistakes

No written terms on domestic work. The most common gap and the most costly one, because nothing else fills it.

“30 days” with no date on the invoice. Put the due date on the invoice and the argument disappears.

Setting an interest rate below the statutory one on commercial work. Your contractual rate displaces the statutory entitlement, so unless there’s a reason for it, don’t specify a rate at all and let the statutory one apply.

Signing whatever the main contractor’s terms say. Long payment periods and pay-when-paid clauses come as standard. Pay-when-paid is ineffective under s113 anyway, but you want to know that before you sign rather than after.

Sending terms after you’ve started. Terms have to be agreed before or at the point the contract is made to be part of it.

Not naming the paying entity. Get the full company name and number on commercial work.

Do this in FieldHive

Build a set of trade terms and conditions covering payment, deposits, variations, retention of title and guarantees, with your own figures in them, free in your browser and framed as a starting point rather than legal advice. Then put a real due date on every invoice with the invoice generator, which can also add statutory late-payment interest where it applies.

Aid, not advice

This guide explains what payment terms you can set and what applies if you set none. It is not legal advice, and consumer contracts in particular are subject to fairness rules. Have your standard terms reviewed by a solicitor before you rely on them.

*Legislation and figures checked August 2026: Late Payment of Commercial Debts (Interest) Act 1998; gov.uk late commercial payments guidance; Housing Grants, Construction and Regeneration Act 1996.*