Freelance Contract Payment Terms: Exact Clauses and Templates You Can Use Today

A freelance contract without a clear payment section is not really a contract at all — it is a statement of intent. The scope of work tells you what will be done. The payment section determines whether you get compensated for doing it, and what recourse you have when things go wrong.

In practice: Most freelancers who lose money on unpaid invoices did not have missing payment terms because clients are dishonest — they had gaps because the contract never addressed what happens when payment is late, when a project is cancelled mid-way, or when a client disputes the final amount. Understanding your freelancer employment status and rights under HMRC guidance is also important context for structuring these terms. These edge cases are not rare — they come up in every freelance career, usually within the first few years.

The clauses below cover every common payment scenario. Some are one or two sentences. All of them change your position significantly when things go wrong. Use the payment terms clause generator to build a complete payment section for your specific situation, or copy the wording here directly. Also read the freelance payment terms guide for a broader overview of how different terms affect your cash flow.

Net payment terms set the deadline for payment from the date of invoice. "Net 14" means payment is due 14 days from the invoice date. This is the single most important number in your payment section — and most freelancers set it too high. For a full breakdown of how long clients legally have to pay, see how long a client has to pay an invoice.

Net 7 (recommended for smaller projects and new clients)

Payment is due within 7 calendar days of the invoice date (Net 7).
Payment must be received in cleared funds by the due date.

Net 14 (recommended default)

Payment is due within 14 calendar days of the invoice date (Net 14).
Invoices not paid within 14 days are considered overdue and may be
subject to late payment fees as specified below.

Net 30 (for large, established clients)

Payment is due within 30 calendar days of the invoice date (Net 30).
For projects with an invoice value above $[X], payment may be
structured in accordance with the milestone schedule attached.

Due on receipt

Payment is due immediately upon receipt of this invoice.
Work will not proceed or be released until cleared payment is received.

Note: "from date of invoice" is cleaner and more enforceable than "from receipt of services" — the latter creates ambiguity about when delivery was formally accepted. Always anchor your terms to the invoice date.

A deposit clause requires the client to pay a percentage of the project fee before work begins. It filters out uncommitted clients and limits your financial exposure if the engagement collapses early.

Standard deposit clause

A non-refundable deposit of [50]% of the total project fee ($[amount])
is required before work commences. Work will begin within [2] business
days of receipt of cleared funds. The deposit is non-refundable in the
event of cancellation by the client for any reason.

Milestone deposit clause (for longer projects)

Payment will be made in three instalments:

  - Milestone 1 (Project commencement): [30]% — $[amount]
  - Milestone 2 (First draft / midpoint delivery): [40]% — $[amount]
  - Milestone 3 (Final delivery): [30]% — $[amount]

Each milestone payment is due within [7] days of the milestone being
reached. Work on subsequent milestones will not begin until the
preceding milestone payment is received.

Monthly retainer clause

A monthly retainer of $[amount] is due on the [1st] of each month in
advance of services provided that month. Services will be suspended if
the retainer is not received by the [5th] of the month.

A late fee clause does two things: it incentivises on-time payment, and it compensates you for the cost of carrying unpaid debt. Even if you never enforce it, the clause changes client behaviour.

Standard late fee clause

Invoices unpaid after [14] days from the invoice date will accrue a
late payment fee of [1.5]% per month (or [18]% per annum) on the
outstanding balance. Late fees begin accruing from the invoice due date
and continue to accrue until payment in full is received.

[Your Company] reserves the right to pursue recovery of all outstanding
fees, including any reasonable legal or collection costs incurred.

UK statutory late payment (for UK-based freelancers)

Under the UK Late Payment of Commercial Debts (Interest) Act 1998, you're entitled to statutory interest of 8% above the Bank of England base rate on business-to-business invoices. You don't need to include this in your contract for it to apply — but it's worth referencing:

Where applicable under the Late Payment of Commercial Debts (Interest)
Act 1998, statutory interest will be charged at 8% above the Bank of
England base rate on overdue invoices. A fixed compensation fee of
£[40–100] may also be applied per late invoice.

Use the late payment penalty calculator to work out the exact amount owed when a client is overdue, or to check how to charge late fees effectively. Also read how to charge late fees on invoices for guidance on enforcement.

A stop-work clause is your right to pause delivery when payment is overdue. Without this clause in your contract, stopping work mid-project could be construed as breach of contract. With it, you have clear legal authority to pause until payment is received.

Stop-work clause wording

In the event of non-payment beyond [14] days past the invoice due date,
[Your Company] reserves the right to suspend all services, deliverables,
and ongoing work until the outstanding balance is paid in full.

[Your Company] shall not be liable for any delays, losses, missed
deadlines, or damages arising from such suspension. The suspension is
not a termination of the agreement. Work will resume within [2]
business days of receipt of cleared payment.

When enforcing this clause, always notify the client in writing before stopping work, not after. A brief email — "Invoice #[X] remains outstanding. As per our agreement, I'm pausing work from [date] until the balance of $[Y] is cleared" — is professional, documented, and hard to dispute. See how to protect yourself from non-paying clients for the full professional enforcement approach.

A kill fee (or cancellation fee) protects you when a client cancels a project after work has begun. Without one, you may have completed significant work and receive nothing beyond the deposit. The kill fee compensates you for work done and opportunity cost.

Kill fee clause (tiered by completion)

In the event of cancellation by the client after work has commenced,
the following cancellation fees apply based on project completion at
the time of cancellation:

  - 0–25% complete:  25% of the remaining project fee
  - 25–50% complete: 50% of the remaining project fee
  - 50–75% complete: 75% of the remaining project fee
  - 75%+ complete:   100% of the remaining project fee

The initial deposit is non-refundable in all circumstances. Cancellation
fees are in addition to the deposit and any milestone payments already
received. All work completed to the cancellation date remains the
property of [Your Company] until fees are settled in full.

The key principle: the further into a project a client cancels, the more of the fee they owe. This reflects the reality that you've blocked out time, turned down other work, and invested in the project — regardless of whether the client chooses to continue.

A dispute clause establishes the process for raising payment disputes. It prevents clients from using a vague "I'm not happy" complaint as an excuse to withhold all payment indefinitely — and it ensures that undisputed amounts remain due even when part of an invoice is contested.

Payment dispute clause wording

Any disputes relating to an invoice must be raised in writing within
[7] calendar days of the invoice date, specifying the disputed line
items and the basis for the dispute.

Undisputed portions of any invoice remain due and payable by the
original due date, regardless of any dispute relating to other
portions of the invoice.

[Your Company] will respond to any documented dispute within [5]
business days. If no dispute is raised within [7] days of invoice
receipt, the invoice is deemed accepted.

The most important element here is the undisputed amounts clause. It prevents a client from disputing $100 of a $5,000 invoice and withholding the entire balance. For guidance on handling disputes when they do arise, see invoice dispute email templates.

Below is a complete Payment Terms section assembling all clauses above, ready to paste into your freelance contract. Replace all bracketed items with your specifics.

PAYMENT TERMS

1. DEPOSIT
A non-refundable deposit of [50]% of the total project fee ($[amount])
is required before work commences. Work will begin within [2] business
days of receipt of cleared funds.

2. PAYMENT SCHEDULE
Remaining balance is due within [14] calendar days of the invoice date
(Net 14). For milestone projects, payments are due as per the schedule
attached in Schedule A.

3. LATE PAYMENT
Invoices unpaid after [14] days will accrue a late payment fee of
[1.5]% per month ([18]% per annum) on the outstanding balance, accruing
from the invoice due date until payment in full is received.

4. STOP-WORK
In the event of non-payment beyond [14] days past the invoice due date,
[Your Company] reserves the right to suspend all services until the
outstanding balance is paid in full. [Your Company] is not liable for
any delays or losses arising from such suspension.

5. CANCELLATION
In the event of cancellation by the client after work has commenced,
cancellation fees apply as follows: 0–25% complete = 25% of remaining
fee; 25–50% = 50%; 50–75% = 75%; 75%+ = 100%. The initial deposit is
non-refundable in all circumstances.

6. PAYMENT DISPUTES
Disputes must be raised in writing within [7] days of the invoice date,
specifying the disputed items. Undisputed amounts remain due by the
original due date. No dispute is valid unless raised in writing within
this window.

7. GOVERNING LAW
These terms are governed by the laws of [Your Jurisdiction]. Any
disputes not resolved by agreement shall be referred to [small claims
court / binding arbitration] in [Your City/State].

For a version tailored to your specific situation, the payment terms clause generator builds a customised payment section based on your project type, jurisdiction, and preferences.