Payment term

What is a payment term?

A payment term is the period of time during which a customer or buyer of a product or service has time to pay the invoice to the supplier or seller. This can range from a few days to various months, depending on the agreed arrangements between the parties. A payment term can be explicitly stated on the invoice or agreed via a contract or general terms and conditions.

It is essential to make clear agreements on the payment term to avoid disagreements or non-payment. For companies, it is also essential to monitor payment terms to ensure that invoices are paid on time and to manage cash flow. In some cases, penalties or interest may be charged if an invoice is not paid within the agreed payment period.