Invoice Payment Terms: Best Practices for New Zealand Businesses

Your invoice payment terms significantly impact when you get paid. Set them wrong, and you'll be chasing payments for months. Set them right, and cash flows smoothly. Here's what works for New Zealand businesses.

Common Payment Terms Explained

Due on Receipt

Payment expected immediately. Best for retail or small one-off services. Rarely practical for B2B services.

Net 7 / Net 14

Payment due within 7 or 14 days. Increasingly popular and reasonable for most service businesses.

Net 30

The traditional default. Payment due within 30 days. Still common but losing favour as businesses seek faster payment.

Net 60 / Net 90

Extended terms often demanded by large corporates. Challenging for small business cash flow.

Choosing the Right Terms

Consider Your Industry

• Professional services: Net 7 to Net 14
• Trades and contractors: Due on completion or Net 7
• B2B suppliers: Net 14 to Net 30
• Healthcare: Due on service or payment plan

Consider Your Client Size

• Small businesses: Can usually pay Net 7-14
• Large corporates: May require Net 30+ (negotiate)
• Government: Often fixed terms, plan accordingly

Best Practices for Payment Terms

1. Be Specific

Don't write "Payment due soon." Write "Payment due: 21 January 2025" or "Due within 14 days of invoice date."

2. State Terms Before Work Begins

Include payment terms in your quote or proposal. Surprises at invoice time create friction.

3. Include Late Payment Penalties

State clearly: "Overdue invoices incur 2% monthly interest." This motivates timely payment.

4. Offer Multiple Payment Methods

List all accepted methods: bank transfer, credit card, payment plan. Make paying easy.

5. Consider Early Payment Discounts

"2% discount if paid within 7 days" can accelerate payments significantly.

When Terms Aren't Working

If clients consistently pay late despite clear terms, consider:

• Requesting larger deposits upfront
• Progress billing during projects
• Offering payment plans through Fee Funders
• Invoice financing for immediate payment

The Payment Plan Alternative

Sometimes the issue isn't your terms - it's your clients' cash flow. Offering payment plans through Fee Funders gives clients flexibility while you get paid immediately.

You receive 100% upfront. Your client pays monthly. Everyone wins.