Concept Definition
What are payment terms?
Payment terms define the conditions under which a buyer must pay a supplier, including the time allowed for payment, any early payment discounts, and penalties for late payment. They are agreed in the contract and referenced on invoices. Common terms include net 30, net 60, and 2/10 net 30.
How are payment terms expressed in UBL?
UBL 2.1 provides the PaymentTerms element to express payment conditions. Key child elements include:
- Note: Free-text description of payment terms.
- SettlementDiscountPercent: Early payment discount percentage.
- PenaltySurchargePercent: Late payment surcharge.
- PaymentDueDate: Calculated due date.
Frequently Asked Questions
- What is the most common payment term in B2B?
- Net 30 (payment due within 30 days of invoice date) is the most common B2B payment term globally. Larger buyers often negotiate net 60 or net 90 terms. Public sector buyers in the EU are legally limited to 30 days under the Late Payment Directive.
- Can payment terms differ from the contract?
- Payment terms on an invoice should match the contract. Where they differ, the contract terms generally prevail. Disputes arising from conflicting payment terms create legal and compliance risks. E-invoicing systems should pull payment terms from the contract or PO to ensure consistency.