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Calculum Inc

Using the right wording for your payment terms

March 8, 2020
Read time:
6 min

Calculum Inc

Press kit

March 5, 2020
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For a lot of corporations, getting paid on time is a continuing challenge. Some clients are often late with their payments, others need constant supervision, and with some customers, you’re not even certain if they fulfilled the invoices at all. Managing bills and outstanding invoices is essential for the cash flow and well-being of a company. Perhaps your invoice is sitting forgotten in your client’s inbox. Or, maybe, they’ve chosen not to pay you for your products and services. Luckily, wording your payment terms in a strategic way can help you get paid on time. 

Have you ever wondered if there may be specific communication patterns that you should use with your customers to decrease the number of late payments or non-payments overall?

The answer is yes. The wording you utilize with a customer may either motivate or discourage them when it comes to paying invoices.

By scrupulously selecting how you structure your invoice, you'll be able to encourage customers to pay their dues on time. The data analysis below is from one of the largest accounting software providers, FreshBooks, which displays some distinctive patterns on how particular terms affect client payment patterns.

The bar on the right reveals all invoices processed through the accounting department, with a variety of days till payment receipt no matter the key phrases used on their invoice and payment terms.

The chart exhibits that 45.12% of companies that wrote “Thank You” on their bill, received payment during the period of 7 days or less and 12.70% got paid on average during 14 days.

A key strategy, even though not very surprising, is that when asking for payment, mentioning the required time frame within the invoice itself for example adding “7 days” to the document will lead to shorter quicker payments.

Data reveals that mentioning “7 Days” within the bill results in 58.05% fewer than seven days. However, invoices that did not have the key phrases specifying the number of days, presented a slight increase in time-to-paid.


Invoices with specific concise payment terms can still remain unpaid after the number of days listed, but you still get your money faster than if you would not specify when you expect your client to settle the payment.

Below, from the chart, we can examine which phrases correlate with the client’s paying your invoices. Interestingly, utilizing the key phrase “Interest” led to a full invoice payment 92.15% of the time.

To summarize, always add seven days on the invoice, mention that you will charge interest on overdue receipts, and end with a “Thank You”.

Regardless of the payment terms that you put on the invoice - whether it is 7 or 30 days – the clock doesn’t begin ticking until the bill is delivered into your client’s hands. Sending the invoice on time is the most important part of this process.

Never put invoicing off. Every time you do so, you’re pushing your payday further away. The use of templates, electronic invoices, and automating the process can further help getting paid faster.


List the details of the products and services in a way that makes sense to the client – any confusion could create a payment lag. Others, on the other hand, will pay their bills right on time, especially if they are aware of your invoice payment terms and deadlines.

Your invoices should always have straightforward and easy-to-find due dates. If due dates are unclear or troublesome to locate, customers will decide to pay whenever it is convenient for them.

To avoid more confusion or miscommunications regarding the due dates on your invoices, always include the actual date on top of the timeframe (for instance, balance due in 14 days - April 14th at the latest). That way both parties will know the deadline and you will have a basis to charge interest on the unpaid ones.


Make sure that during contract negotiation with your client you mention your payment terms. Bear in mind, that the most important part of the contract is to protect you and your business, so start with terms that suit you best and negotiate from there.

Ideally, your payment terms ought to focus on decreasing the time you wait for your payment and reducing any confusion that might occur between you and your customers. While receiving payments is important, it is also crucial to have healthy, long-term relationships with your clients which will contribute to your stable income over time. This does not mean however that your client’s financial or business challenges should become your problem.

Do not be afraid to ask for your payment within the seven days window, the clients who can pay you. But if you do not ask, they might assume 30 days is fine too, making you wait longer. Remember about keeping the balance of getting paid as soon as possible and as early as the client finds it convenient. Especially if your clients have multiple invoices to take care of and not enough funds, they might prioritize other bills instead of yours, leaving you to wait an additional couple of days or weeks.


You ought to have a say in how your clients pay for your products and services and this should also be included in your payment terms.

While deciding on how you would like to get paid, try making it as easy as possible for your customers. Paying bills and invoices that are piling up every month can get overwhelming therefore, the more convenient it is for your client to pay you - the faster you will see the money in your account


Make sure your invoice goes straight to the person who makes the payment to avoid getting lost in someone else’s inbox. That will probably be different from the person who ordered the work. If you’re unsure exactly who’s in charge of accounts, give them a call – knowing the person paying the bills pays off.

Let’s Talk About What Invoice Payment Terms Actually Are

Before you rush to change the wording on your invoices, there are a couple of things you should take note of.

Payment terms on an invoice are usually situated at the end of an invoice. The details should include

  • Expected Payment Deadline
  • Interest Charges for Late Payment
  • Accepted Payment Method

Additionally, understanding and strategically crafting payment terms provide companies with more control over their cash flows. There are various choices as to which phrases and terms to incorporate in your invoices, some aren’t widely understood by professionals.

Here are some useful phrases and acronyms to help with the creation of your payment terms:

Net monthly account - Payment due on the last day of the month following the one in which the invoice is dated

Upon receipt - Payment is expected immediately when the invoice is received

Net 7, 21, 30, 60, etc. - Payment 7, 21, 30, 60, etc. days after the invoice date

EOM - End of month

21 MFI - 21st of the month following invoice date

1% 10 Net 30 - 1% discount if payment received within 10 days, otherwise payment is due 30 days after the invoice date

COD - Cash on delivery

Cash account - Account conducted on a cash basis, no credit

Letter of credit - A documentary credit confirmed by a bank, often used for exports and imports

Bill of exchange - A written order used primarily in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date

CND - Cash next delivery

CBS - Cash before shipment

CIA - Cash in advance

PIA - Payment in advance

CWO - Cash with order

1MD - Monthly credit payment of a full month’s supply

2MD - As above plus an extra calendar month

Contra - Payment from the customer offset against the value of supplies purchased from the customer

Stage payment - Payment of agreed amounts at stage

Your Key Takeaway

Request invoice payment to be fulfilled within seven days, and mention interest charges on overdue invoices - this will encourage your clients to pay you faster.

Most importantly, communicate with your clients so that they are aware of your invoice payment terms from the beginning. Making sure both parties are on the same page avoids confusion, manages expectations, and makes the collaboration smoother.

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