How to Negotiate Payment Terms

Payment terms directly impact your cash flow. Here's how to negotiate terms that get you paid faster and more reliably.

Key Terms to Negotiate

1. Payment Timeline

Goal: Net 30 or better (not Net 60 or 90)

• Ask: "Can we do Net 15 instead of Net 45?"
• Offer: Small discount for early payment (e.g., 2% for Net 10)
• Counter: If they insist on Net 60+, request higher rates

2. Deposits and Milestones

Goal: Reduce risk through progress payments

• Standard: 25-50% deposit, remainder on completion
• Large projects: 25% upfront, 25% at midpoint, 50% on delivery
• Never: 100% due at end with no progress payments

3. Late Payment Penalties

Goal: Consequences for delayed payment

• Interest: 1-1.5% per month on overdue amounts
• Suspension: Right to pause work if payment is late
• Recovery: Client pays collection costs if you need to pursue

4. Work Stoppage Rights

Goal: Protection if payment stops

• Include: "Contractor may suspend services if payment is 15+ days overdue"
• No breach: Suspension doesn't constitute breach by you
• Retention: Keep work product until paid

Pushback Responses

"Our standard terms are Net 60"

Response: "I understand that's your standard. However, my business requires faster cash flow. Could we do Net 30, or structure progress payments?"

"We don't pay deposits"

Response: "For a project of this size, some upfront payment protects both of us by confirming commitment. Would 25% work, with the remainder tied to milestones?"

"We can't agree to late fees"

Response: "The late fee provision is standard and only kicks in if payment is late. If you pay on time—which I'm sure you will—it never applies."