# Payment Terms Policy > Creates payment terms and collections policies with net terms, late fee structures, and escalation procedures. Use when establishing how and when clients must pay. - Skill: `reaperinvest/payment-terms-policy` (Agent Skill) - Install (CLI): `npx skillmds@latest add reaperinvest/payment-terms-policy` - Raw SKILL.md: https://api.skillmd.com/api/skills/reaperinvest/payment-terms-policy/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - Author: reaperinvest (https://skillmd.com/u/reaperinvest) - Updated: 2026-09-22 - Page: https://skillmd.com/skills/reaperinvest/payment-terms-policy --- # Payment Terms Policy ## When to Use This Skill Use this skill when you need to: - Establish standard payment terms for your business - Create a late payment and collections escalation policy - Draft payment terms language for contracts and invoices - Design early payment incentives or late fee structures **DO NOT** use this skill for creating invoices, pricing strategies, or full client agreements. This is specifically for the payment terms and collections process. --- ## Core Principle CLEAR PAYMENT TERMS PREVENT 90% OF COLLECTIONS ISSUES — STATE THE RULES UPFRONT, ENFORCE THEM CONSISTENTLY, AND ESCALATE PREDICTABLY. --- ## Phase 1: Business Context ### Required Inputs | Input | What to Ask | Default | |-------|------------|---------| | **Business type** | "What type of business? (freelance, agency, SaaS, product)" | Service-based | | **Average invoice amount** | "What is your typical invoice size?" | $1,000-5,000 | | **Current terms** | "What payment terms do you currently use? (net 30, due on receipt)" | Net 30 | | **Payment methods accepted** | "How can clients pay? (credit card, ACH, wire, check)" | Credit card + ACH | | **Late payment issues** | "Are you experiencing late payments now?" | Some | | **Client type** | "B2B or B2C? Large companies or small businesses?" | B2B small businesses | **GATE: Do not proceed without business type and typical invoice size.** --- ## Phase 2: Payment Terms Design ### Standard Terms Options ``` ## Payment Terms Policy ### Recommended Terms: [Net XX] | Term Type | When to Use | Risk Level | |-----------|------------|-----------| | Due on receipt | Small projects, new clients, under $1,000 | Lowest | | Net 15 | Standard services, retainer invoices | Low | | Net 30 | Established clients, B2B standard | Medium | | Net 45-60 | Enterprise clients only (with justification) | Higher | | 50% upfront / 50% on delivery | Projects, custom work | Lowest | | Monthly retainer (due 1st of month) | Ongoing services | Low | ### Selected Terms Structure **Standard terms:** [Net XX] **New client terms:** [Due on receipt or 50/50 split] **Retainer terms:** [Due on 1st, auto-charge preferred] **Large project terms (>$[X]):** [Milestone payments — 33/33/34 or 50/25/25] ``` ### Early Payment Incentives ``` ### Early Payment Discount (Optional) - 2/10 Net 30: 2% discount if paid within 10 days - 1/15 Net 30: 1% discount if paid within 15 days Only offer if cash flow timing matters more than the discount cost. ``` ### Late Fee Structure ``` ### Late Payment Fees | Days Past Due | Action | Fee | |--------------|--------|-----| | 1-7 days | Courtesy reminder email | None | | 8-15 days | Late notice + late fee applied | [1.5% per month or $X flat] | | 16-30 days | Second notice, phone call | Additional interest accrues | | 31-60 days | Final notice, work paused | Services suspended | | 61-90 days | Collections warning letter | Formal demand | | 90+ days | Collections agency or legal | External collections | **Late fee rate:** [1.5% per month / 18% annually — check state usury laws] **Grace period:** [7 days from due date] **Compounding:** [Simple interest, not compounding] ``` --- ## Phase 3: Collections Process ### Escalation Templates ``` ### Email Template: Courtesy Reminder (Day 1-7) Subject: Friendly reminder — Invoice #[X] due [date] Hi [Name], Just a quick reminder that Invoice #[X] for $[amount] was due on [date]. If you have already sent payment, please disregard this message. You can pay here: [payment link] Thanks, [Your name] --- ### Email Template: Late Notice (Day 8-15) Subject: Past due — Invoice #[X] ($[amount]) Hi [Name], Invoice #[X] for $[amount] is now [X] days past due. A late fee of $[X] has been applied per our payment terms. Please remit payment by [new date] to avoid additional fees. Pay here: [link] If there is an issue with this invoice, let me know and we can resolve it. [Your name] --- ### Email Template: Final Notice (Day 31-60) Subject: Final notice — Invoice #[X] past due Hi [Name], Invoice #[X] for $[amount] is now [X] days past due. As stated in our agreement, services have been paused until the balance is resolved. Total due (including late fees): $[X] Please remit payment within 7 days. If we do not receive payment or a response, we will proceed with formal collections. [Your name] ``` --- ## Phase 4: Policy Document ### Invoice Language ``` ## Payment Terms (for invoice footer or contract) Payment is due within [X] days of invoice date. A late fee of [1.5%] per month will be applied to balances outstanding beyond the [7]-day grace period. Client is responsible for all costs of collection, including reasonable attorney fees. [Business Name] reserves the right to suspend services on accounts more than [30] days past due. ``` ### Implementation Checklist ``` - [ ] Payment terms added to contract template - [ ] Late fee language added to invoice template - [ ] Payment link included on every invoice - [ ] Auto-reminder set up in invoicing software (Day 1, 7, 14, 30) - [ ] Collections escalation process documented - [ ] Team trained on enforcement (no exceptions without approval) - [ ] Late fee rate compliant with state usury laws ``` --- ## Example: Freelance Consultant **Terms:** Net 15 for ongoing clients, 50% upfront for new clients and projects over $5,000. Late fee: 1.5% per month after 7-day grace period. Auto-reminders at Day 1, 7, and 14. Services paused at Day 30. **Result:** Average days-to-payment dropped from 38 to 14 after implementing clear terms and auto-reminders. --- ## Anti-Patterns - **No written terms** — verbal agreements lead to "I thought it was net 60." Put terms in writing on every contract and invoice. - **Terms but no enforcement** — if you never charge late fees, your terms are suggestions. Enforce consistently. - **Net 60+ for small businesses** — only enterprise clients justify long terms. Small business clients should pay net 15-30. - **No upfront payment on projects** — custom work without deposits is a risk. Always collect 30-50% before starting. - **Emotional collections** — follow the escalation process mechanically. Angry emails damage relationships and rarely get you paid faster. --- ## Recovery - **Currently owed money with no terms in place:** Implement terms going forward. For existing overdue invoices, send a professional reminder and offer a payment plan if needed. - **Client refuses late fees:** Decide if the relationship is worth it. For valuable clients, waive the fee once but communicate that terms apply going forward. - **State restricts late fee rates:** Research your state's usury laws. Most states allow 1-1.5% per month for commercial transactions. - **Client disputes the invoice:** Pause collections. Resolve the dispute first, then restart the clock on payment terms.