If you don’t use payment terms, the legal UK default is 30 days. Depending on your business and cash flow, you might want to offer shorter or longer windows for payment. You do this by setting payment terms.

If you’ve never done it, figuring out how to set up your sole trader payment terms can be overwhelming. There are loads of different acronyms, and each one has a couple of variations. 

In this payment terms article, you’ll learn:

  • What are payment terms?
  • What do you need to include in your invoices?
  • What do specific terms mean?
  • How can you speed up your financial management?

What are payment terms?

Sometimes called invoice payment terms, they are like directions on how and when you want to get paid. They can include what forms of payment you’ll accept, how quickly you want to be paid, and if you provide any discount for paying within a certain time frame.

Payment terms for sole traders are no different than for any other business. You are providing goods or services, and by including these terms in your invoice, you should get paid exactly when you expect to.

It’s not always possible to guarantee that your customers will pay on time, but you can improve the chances. You can highlight the pros of paying quickly by providing clear information on how long they have to pay. You could also include other conditions (such as a discount for early payment or a fine for late payment). 

What do you need to include in your invoices?

According to the government’s guide to invoicing and taking payment, any invoice you write must include the following:

  • A unique identification number
  • Your name, company name, address, and contact details
  • The name and address of your customer
  • The goods or service you’re charging for
  • When the goods or service was delivered
  • How much you’re charging for the goods or service
  • The date you wrote the invoice
  • VAT (if applicable)
  • The total amount to be paid

This is everything needed to create a valid invoice, but you can also include various payment terms in order to set guidelines around how you expect to be paid. For example, if you want customers to pay within 14 days of sending the invoice, that should also be included. 

What do specific terms mean?

There are loads of different terms, and each one means a different thing. It can be confusing if you don’t have a glossary to refer to, which is why we’ve compiled one below. 

Some of the most common terms are:


PIA means, quite simply, Payment In Advance. If you’re sending someone an invoice prior to delivery, you may want to use PIA. Then they’ll know that they should pay you before delivery takes place.


If you want to be paid Cash On Delivery, then you should make a COD note on the invoice and send it prior to delivery. This will give your client enough time to gather the funds before your expected delivery. 

Net 7

If an invoice says “Net 7”, it means that you expect payment seven days after the invoice is sent. It’s worth remembering that although there are five common variations of Net (7, 10, 30, 60, and 90), any number that follows it is how long until payment is due. 


If you’d rather get consistently paid at the end of the month, you can use EOM. That way, you can always expect your money to arrive at the same time each month. Depending on when you send your invoice (such as in the final week of the month), EOM can make it harder for a client to pay on time. 


If you want your money to arrive on a specific day, you can use MFI along with a number. This can be really useful if you’ve got regular outgoings, and need to make sure you’ve got the funds in time.

MFI means “Month Following Invoice date”, and it can provide flexibility to your clients if you’ve got good cash flow. Using 7 MFI as an example, if you send an invoice on the 18th of June, the deadline for payment would be the 7th of July.

5% 7 Net 30

A variation of “Net”, the percentage and number following offer a specific discount if the invoice is paid within the specified time frame. For example, a client would receive a 5% discount for paying in the first seven days, and the full price if they take longer. Methods like this can help to encourage clients to pay sooner than usual. 

If using the short form is confusing, you can also write out each term in clear language. For example, “Payment is expected within 10 days” instead of “Net 10”. Using these terms can politely let your client know when to pay you, and could help improve your cash flow.

How can you speed up your financial management?

Having to write everything out, each time you want to get paid can end up being extremely time consuming –– especially if you’re filling out your payment terms on every single invoice. That’s why thousands of business owners use the Countingup app to aid their financial management.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here and start your three-month free trial today.