Generate payment terms and late fee clauses
AI writes Net-30 payment provisions with 1.5% monthly late fees. Get professional payment terms instantly.
Generate payment terms and late fee clauses
River's Payment Terms and Late Fee Clause Generator creates comprehensive payment provisions for contracts. Clear payment terms specify when payment is due, how payment is made, late fees for overdue invoices, and remedies for non-payment. You specify the payment schedule (Net 30, Net 60), late fee rate, dispute procedures, and suspension rights. The AI generates professional payment clauses with enforceable late fees. Perfect for freelancers, small firms, and anyone creating services agreements or vendor contracts.
Unlike vague payment language that creates disputes about when payment is due, comprehensive payment clauses specify invoice timing, payment due dates, acceptable payment methods, late fees, dispute resolution, and remedies for non-payment. The AI generates provisions protecting cash flow while providing reasonable terms customers will accept. You get balanced clauses that encourage prompt payment while maintaining reasonable commercial terms.
This tool is perfect for attorneys drafting services agreements, freelancers creating contract templates, small businesses managing vendor terms, and corporate counsel setting standard payment terms. Use payment clauses in services agreements, consulting contracts, vendor agreements, and any contract involving payment obligations. Great for creating consistent payment terms across agreements. The AI generates foundation clauses attorneys customize for specific deals.
Payment Terms That Get You Paid
Clear payment terms prevent disputes about when payment is due. 'Net 30' means payment is due 30 days after the invoice date. Be explicit: 'Client shall pay all undisputed invoices within thirty (30) days of the invoice date.' Specify when invoices are sent (monthly, upon completion of milestones, etc.), how they're sent (email, portal), and acceptable payment methods (check, ACH, wire transfer). The more specific your payment terms, the fewer disputes arise about what's owed and when.
Late fees incentivize prompt payment and compensate for the time value of money. Common late fees are 1.0% to 1.5% per month (12-18% annually) or a flat fee for late payments. However, some states cap late fees or require they be 'reasonable.' Excessive late fees might be challenged as unenforceable penalties. Research your state's usury laws and penalty limitations. Include language like '1.5% per month or the maximum rate permitted by law, whichever is less' to ensure enforceability. Late fees should compensate for late payment, not punish customers.
Include suspension rights to protect against non-payment. Clauses allowing service suspension if payment is X days overdue create leverage to collect. For example: 'If Client fails to pay undisputed amounts within ten (10) days after written notice of delinquency, Service Provider may suspend Services until all overdue amounts are paid.' This gives customers warning while protecting providers from working without payment. Balance leverage with maintaining customer relationships. Many providers are hesitant to suspend services for good customers with temporary payment issues. Make suspension discretionary (may suspend) not mandatory (shall suspend).
What You Get
Complete payment terms provision
Clear payment due dates and schedules
Late fee calculation and rate
Dispute resolution procedures
Service suspension rights for non-payment
How It Works
- 1Specify payment termsEnter payment schedule, late fees, and suspension rights
- 2AI generates clauseOur AI creates payment provision in seconds
- 3Insert into contractAdd clause to agreement's payment section
Frequently Asked Questions
What payment terms should I offer?
Net 30 is standard for commercial services. Net 15 favors service providers but might meet customer resistance. Net 60 favors customers but strains provider cash flow. For small projects, 'due upon receipt' or 'due within 15 days' is reasonable. For large projects, consider milestone payments (payment at defined project stages) or monthly invoicing for ongoing services. Match payment terms to your industry standards and cash flow needs. Shorter terms are better for cash flow but might reduce customer satisfaction. Balance your financial needs with competitive terms.
What late fee rate is enforceable?
1.0% to 1.5% per month (12-18% annually) is common and generally enforceable. Some states cap late fees at specific rates or require them to be 'reasonable.' Excessive late fees might be struck down as unenforceable penalties. Include language like '1.5% per month or the maximum rate permitted by law, whichever is less' to protect enforceability. Research your state's usury laws. Late fees should reasonably compensate for the cost of late payment, not act as punishment. Document that your late fee rate reflects the time value of money and administrative costs.
How do I handle disputed invoices?
Require customers to dispute invoices within a specified period (e.g., 10 days of receipt) and to pay undisputed amounts. For example: 'Client shall notify Service Provider in writing of any disputed charges within ten (10) days of receiving the invoice. Failure to provide such notice constitutes acceptance of the invoice. Client shall pay all undisputed amounts by the due date.' This prevents customers from disputing invoices as a delay tactic and ensures you get paid for undisputed work while resolving legitimate disputes.
Can I charge customers for collection costs?
Yes, many payment clauses include cost recovery provisions: 'If Service Provider engages attorneys or collection agencies to collect overdue amounts, Client shall pay all reasonable collection costs, including attorneys' fees and court costs.' This creates additional incentive for prompt payment and ensures you're not bearing the cost of collecting your own money. However, only include this if you're willing to actually pursue collection. Empty threats reduce credibility. Some states limit collection cost recovery, so verify enforceability in your jurisdiction.
Should I require payment in advance?
For new customers, small projects, or high-risk situations, advance payment or deposits make sense. Common approaches: require 50% deposit before starting, bill milestones before performing that phase, or require advance payment for month 1 of ongoing services. This protects you from non-payment but might meet customer resistance. Established customers expect payment after services. Balance risk with customer preferences. For ongoing relationships, monthly invoicing after services is standard. For one-time projects or new customers, advance payment or deposits are reasonable.
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