How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to:
✅ Three Ways to Use This Tool
1. Draft new invoice terms: Ensure you don't miss any essential payment and invoicing requirements
2. Review existing terms: Audit your current invoice terms against all 52 compliance points
3. Standardize billing: Create consistent payment conditions across all customer invoices
⚠️ Where Should Invoice Terms Be Placed?
📄 On Every Invoice: Invoice terms should appear on or accompany every invoice you issue. This ensures customers are aware of payment obligations at the time of billing.
📍 Common Placements: Bottom of invoice document, second page of invoice, or as a separate "Terms & Conditions" document referenced on the invoice.
⚖️ Legal Requirements: Under UK law, payment terms must be clearly communicated before or at the time goods/services are supplied. Terms incorporated after supply may not be enforceable.
🔗 Digital Invoices: For electronic invoicing, include terms directly in the email or PDF, or provide a clear link to terms on your website.
⚠️ What Are Invoice Terms & Payment Conditions?
📋 Definition: Invoice terms are the contractual conditions that govern when and how customers must pay for goods or services, including late payment consequences and dispute procedures.
⚖️ Legal Status: These terms form part of the contract between supplier and customer. Under the Late Payment of Commercial Debts Act, you have statutory rights to interest and recovery costs, but clear written terms strengthen enforceability.
🎯 Purpose: Invoice terms protect your cash flow by setting clear payment deadlines, defining acceptable payment methods, establishing late payment penalties, and providing remedies for non-payment.
💼 Business Benefits: Clear invoice terms reduce payment delays, minimize disputes, provide legal protection for debt recovery, and demonstrate professionalism to customers and lenders.
⚠️ Understanding Importance Levels
🔴 Critical: Must have - omission creates serious legal risk, makes enforcement difficult, or violates UK statutory requirements
🟡 Important: Should have - recommended for proper protection, clarity, and professional standards
🔵 Recommended: Best practice - enhances clarity, prevents disputes, and improves customer relationships
Full Company Legal Name
Complete legal name of your business exactly as registered with Companies House. Required by Companies Act 2006 Section 82 for all business documents and invoices.
🔴 Critical
Registered Business Address
Full registered office address where legal notices can be served. Required by Companies Act 2006 for limited companies and LLPs. Essential for contract enforceability.
🔴 Critical
Company Registration Number
Companies House registration number. Legally required on all company invoices and business documents per Companies Act 2006. Enables customers to verify your business legitimacy.
🔴 Critical
VAT Registration Number (If Applicable)
VAT registration number if VAT-registered. Required by HMRC on all VAT invoices per VAT Act 1994. Customers need this for VAT reclaim purposes.
🔴 Critical
Contact Information
Phone number, email address, and/or website for invoice queries and payments. Recommended for customer service and dispute resolution. Demonstrates professionalism and accessibility.
🔵 Recommended
⚠️ Why Payment Terms Must Be Clear
Vague payment terms like "payment on receipt" or "payment when convenient" are unenforceable and leave you vulnerable to indefinite payment delays. UK contract law requires certainty - you must specify an exact payment deadline (e.g., "30 days from invoice date" or "14 days from delivery"). Without clear terms, customers can argue they had reasonable time to pay, which courts may interpret as 30+ days.
Specific Payment Due Period
Exact timeframe when payment is due (e.g., 7 days, 14 days, 30 days, 60 days). Essential for enforceability under UK contract law. Vague terms like "immediately" or "promptly" are unenforceable.
🔴 Critical
Payment Due From Date Defined
When the payment period starts: from invoice date, delivery date, or end of month. Critical for calculating due dates and late payment. Must be unambiguous to avoid disputes.
🔴 Critical
Payment Currency Specified
Currency for all payments (typically GBP for UK businesses). Required to avoid exchange rate disputes and ensure customers know exact amounts due. Essential for international transactions.
🔴 Critical
Time for Payment Clause
Statement that "time for payment is of the essence" - makes payment deadlines contractually binding and strengthens your right to terminate for non-payment. Important legal protection.
🟡 Important
Payment in Full Requirement
Clause requiring full payment without deduction, set-off, withholding, or counterclaim. Prevents customers deducting alleged damages or making partial payments. Protects your cash flow.
🟡 Important
VAT Treatment Statement
Clear statement whether prices include or exclude VAT. Required by HMRC and essential to avoid disputes over amounts due. Must be explicit on every invoice.
🔴 Critical
Late Payment Interest Rate
Specific interest rate charged on overdue invoices. UK Late Payment Act allows 8% + Bank of England base rate (statutory interest). Can specify higher rate if agreed in advance. Must state actual percentage.
🔴 Critical
Interest Accrual Method
How interest is calculated: daily accrual, monthly compounding, from due date until paid in full. Prevents disputes over interest calculations. Important for recovering actual costs of late payment.
🟡 Important
Debt Recovery Costs
Right to recover reasonable costs of collecting overdue payments: legal fees, court costs, administration charges. Permitted by Late Payment Act 1998. Must specify customer is liable for recovery costs.
🟡 Important
Suspension of Services
Right to suspend further deliveries or services if invoices remain unpaid. Protects you from supplying to non-paying customers. Important leverage for encouraging payment.
🟡 Important
Termination for Non-Payment
Right to terminate contract or refuse future business if payment persistently late or not received. Provides ultimate remedy for non-paying customers. Demonstrates serious consequences.
🔵 Recommended
⚡
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Accepted Payment Methods Listed
Clear list of payment methods you accept: bank transfer (BACS), Direct Debit, credit/debit card, cheque, PayPal, etc. Prevents customers claiming they couldn't pay due to method unavailability.
🔴 Critical
Bank Details Provided
Full bank details if accepting transfers: bank name, sort code, account number, account name, payment reference format. Essential for customers to make payments. Include IBAN/BIC for international payments.
🟡 Important
Bank Charges Responsibility
Statement that customer is responsible for all bank charges relating to payment. Ensures you receive full invoice amount without deductions for transfer fees. Particularly important for international payments.
🟡 Important
Payment Clearance Rules
Clarification that payment by cheque is only deemed received once cleared. Protects against bounced cheques. Also useful to state electronic payments are deemed received when cleared funds reach your account.
🔵 Recommended
⚠️ Legal Invoice Requirements
Under UK law, certain information MUST appear on every invoice. For VAT-registered businesses, HMRC has strict requirements per VAT Act 1994. For all businesses, invoices must contain sufficient detail to be legally enforceable as proof of debt. Missing mandatory elements can prevent you recovering payment through legal action.
Unique Invoice Number
Every invoice must have a unique sequential number. Required by HMRC for VAT purposes and essential for accounting records. Enables tracking and referencing specific invoices in payment/dispute processes.
🔴 Critical
Invoice Date Clearly Shown
Date the invoice was issued. Required by law and essential for calculating payment due dates, late payment interest start dates, and tax periods. Must be prominent and unambiguous.
🔴 Critical
Customer Details Included
Customer's name and address on every invoice. Required by HMRC for VAT invoices and essential for enforceability. Proves who owes the payment and where legal notices can be served.
🔴 Critical
Detailed Description of Goods/Services
Clear description of what was supplied: goods, services, dates, quantities. Required by HMRC for VAT and necessary for contract enforceability. Prevents disputes over what was actually provided.
🔴 Critical
Amount Breakdown
Itemized amounts showing unit prices, quantities, subtotals, VAT amounts (if applicable), and total amount due. Required for transparency and VAT reclaim. Reduces payment disputes.
🔴 Critical
Payment Due Date Specified
Exact date payment is due (calculated from invoice date per payment terms). Makes deadline crystal clear to customer. Prevents "I didn't know when to pay" disputes.
🟡 Important
Deposit Requirement Stated (If Applicable)
If you require deposits, specify percentage or fixed amount due before work begins. Common for custom work, large orders, new customers. Protects against non-payment after commencing work.
🟡 Important
Deposit Payment Deadline
When deposit must be paid (e.g., before work commences, within 7 days of order, upon signing contract). Clarifies that work won't start until deposit received. Prevents expectation mismatches.
🟡 Important
Deposit Refund Policy
Whether deposits are refundable and under what circumstances (cancellation by customer, work cannot be completed, etc.). UK law presumes deposits are non-refundable unless stated otherwise.
🟡 Important
Deposit Deduction from Final Invoice
How deposit is applied: deducted from final invoice, allocated to first installment, etc. Ensures customer understands deposit reduces final payment amount. Prevents double-payment disputes.
🔵 Recommended
Stage Payment Structure (If Applicable)
If using milestone-based payment, define stages clearly: percentages or amounts due at each milestone. Common for construction, software development, consulting projects. Improves cash flow on long projects.
🟡 Important
Stage Completion Criteria
How each stage is deemed complete: customer sign-off, delivery of specific deliverables, achievement of milestones. Prevents disputes over whether payment is due.
🟡 Important
Stage Payment Deadlines
When each stage payment is due: X days after stage completion, upon invoice, before next stage begins. Ensures prompt payment at each milestone. Essential for project cash flow.
🟡 Important
Work Suspension for Non-Payment
Right to suspend work if stage payments not received by due date. Protects you from continuing work without payment. Provides leverage to ensure timely payment.
🔵 Recommended
Retention Percentage (If Applicable)
If retention applies (common in construction), specify percentage withheld by customer (typically 5-10%). Retention held as security for defect rectification during defects liability period.
🟡 Important
Retention Release Date
When retention is released: after defects period (6-12 months post-completion), after final inspection, or in installments (half at completion, half after defects period).
🟡 Important
Retention Conditions
Conditions for release: no outstanding defects, completion of snagging items, customer satisfaction confirmed. Clarifies what must be achieved before retention is paid.
🔵 Recommended
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Query Deadline Specified
Timeframe within which customer must raise invoice queries or disputes (e.g., 7 days, 14 days, 30 days from invoice date). After deadline, invoice deemed accepted. Prevents late disputes.
🟡 Important
Query Process Defined
How queries must be submitted: in writing, via email, to specific contact. Ensures you receive proper notification of disputes. Prevents verbal query disputes.
🔵 Recommended
Deemed Acceptance Clause
Statement that if no query raised within specified period, invoice is deemed accepted and payment is due. Strengthens your position if customer disputes invoice after payment due date.
🟡 Important
Payment of Undisputed Amounts
Clarification that raising a query doesn't entitle customer to withhold payment of undisputed portions. Customer must pay accepted amounts while query is resolved. Protects your cash flow.
🟡 Important
No Set-Off Clause
Statement that customer cannot withhold payment or deduct amounts from invoices unless court judgment obtained or written agreement. Prevents customers unilaterally deducting alleged damages or counter-claims.
🟡 Important
Exceptions to Set-Off
Limited circumstances where set-off is permitted: court judgment, written agreement, statutory right (e.g., under Construction Act). Defines rare cases where deduction is acceptable.
🔵 Recommended
Cleared Funds Requirement
Statement that payment is only deemed received when cleared funds are in your bank account. Protects against bounced cheques or reversed transactions. Important for determining late payment dates.
🔵 Recommended
Price Increase Mechanism (If Applicable)
How and when prices can increase: annual RPI adjustment, specific percentage cap, notice period required. For ongoing contracts, reserves right to increase fees. Without this, prices are locked for contract duration.
🔵 Recommended
Price Increase Notice Period
Advance notice required before price increases take effect (e.g., 30 days, 60 days, 90 days). Gives customers time to adjust budgets or terminate if unwilling to accept. Demonstrates fairness.
🔵 Recommended
Right to Adjust for Errors
Right to issue credit notes for overcharges or corrected invoices for undercharges/errors. Clarifies that genuine mistakes can be corrected. Prevents disputes when errors discovered.
🔵 Recommended
Governing Law Specified
Which UK jurisdiction's laws apply: England & Wales, Scotland, or Northern Ireland. Required for enforcement and determining legal rights. Standard requirement for UK contracts.
🔴 Critical
Jurisdiction for Disputes
Which courts have jurisdiction over payment disputes (e.g., Courts of England & Wales). Essential if legal action needed to recover debts. Prevents arguments over where claims should be brought.
🔴 Critical
Terms Form Part of Contract
Statement that these invoice terms form part of the contract between parties. Incorporates terms into main agreement, making them legally binding. Essential for enforceability.
🟡 Important
Survival of Payment Obligations
Clarification that payment obligations survive termination of main contract. Even if relationship ends, outstanding invoices remain due. Protects against "contract's over, I don't have to pay" arguments.
🟡 Important
Title and Risk (For Goods)
For goods, when title passes to customer (typically on full payment). Allows you to retain ownership until paid, enabling repossession if payment not received. Romalpa clause protection.
🟡 Important
Data Protection Compliance
Reference to use of customer data for invoicing, payment processing, and debt recovery per UK GDPR and Data Protection Act 2018. Demonstrates compliance with data protection laws.
🔵 Recommended
Communication Methods
How notices and invoices are delivered: email, post, online portal. Specifies valid methods of communication for legal notices. Email increasingly accepted if agreed in advance.
🔵 Recommended
Amendment Rights
Right to amend invoice terms with reasonable notice. For ongoing relationships, allows updating terms as laws or business practices change. Must give adequate notice (typically 30-60 days).
🔵 Recommended
Severability Clause
If any term is found unenforceable, remaining terms continue in force. Protects overall terms if one provision is invalid. Standard legal protection clause.
🔵 Recommended
Waiver Clause
Failure to enforce any term doesn't waive right to enforce later. Allows flexibility (e.g., accepting one late payment without interest) without losing rights permanently. Important protection.
🔵 Recommended
⚡
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Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template (Recommended)
Save hours of legal research and drafting. Our professionally-crafted invoice terms cover all 52 compliance points with legally-sound wording. Available in both Interview Mode (guided questionnaire) and Editor Mode (direct editing) for just £10.
📝 Draft Your Own Invoice Terms
Use this checklist as your guide, but remember: getting the legal wording correct is complex. Invoice terms require precise language around payment deadlines, late payment interest, set-off restrictions, and statutory rights under the Late Payment of Commercial Debts Act. A single compliance gap can weaken your ability to recover debts.
⚖️ Book a Legal Consultation
For high-value contracts, international transactions, complex payment structures, or if you need customized invoice terms beyond standard templates, consider booking a consultation with our legal professionals for personalized advice tailored to your specific business circumstances.
Need personalized legal advice? Book a consultation →