Payment terms
The agreed rules for how and when a client pays - amounts, due dates, deposits and what happens if an invoice is late.
For example, a contract sets 50% upfront and 50% on delivery, with invoices due net 15 and a late fee after that. Clear terms mean the agency is not financing the client's project out of its own cash flow.
Why it matters to your firm: payment terms are what stand between an agency and a cash-flow crisis. Upfront deposits, short due dates and late fees keep money moving and the power balanced - lax terms are how profitable agencies still end up unable to make payroll.
What good looks like
Net 15-30 days is typical; shorter terms - or deposits and milestone billing - protect agency cash flow.
Common mistakes
- Defaulting to long net terms that strangle cash flow.
- No late-payment interest or stop-work clause.
- Invoicing slowly, which delays the whole cycle.