What payment terms should a trade business agree before starting work?

Terms to settle before work

Business.gov.au says terms should cover the payment methods you accept, when you expect payment (for example up front, instalments, on delivery or after 30 days), whether you offer credit, and how you collect overdue payments. The milestone evidence column is our recommendation.

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Credit, late payment and risk

If you give credit, Business.gov.au suggests credit checks, limits on how much credit you offer, and making clear that customers do not own the goods until paid in full. It describes a polite reminder first, then a letter of demand or a debt collecting service, and says sometimes the best option is to stop chasing and write off the debt.

Do not copy another business's late fee. Include a charge only if you have agreed it in writing and checked it with an adviser. This guide does not treat any payment period, such as 30 days, as a standard.

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Building and construction jobs

Each state and territory has security of payment laws for building and construction, which cover contractors in the state where the work was done. In most states a payment claim gives the hirer a strict timeframe to pay or respond. Check those laws before fixing deposit, stage or claim terms.

If you offer pre-written terms on a take-it-or-leave-it basis to small businesses, unfair contract term rules in the Australian Consumer Law may apply.

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Payment terms checklist you can copy

Work through this with the customer and attach it to the quote. It is our own checklist, not a statutory form.

PAYMENT TERMS CHECKLIST (discuss before work starts)
Job and site: [address]   Customer: [name]
Quote or contract reference: [ref]

1. When payment is due: [deposit, stage, completion or credit period, as agreed]
2. What triggers each invoice: [milestone or date, and the evidence we will give you]
3. Amount for each trigger: $[amount] (GST included: yes/no)
4. Accepted payment methods: [list]
5. Where invoices are sent: [email or address]
6. Contact for queries or disputes: [name, phone, email] and response time: [time]
7. If payment is late: [agreed reminder steps and dates]; any charge only if agreed in writing: [details]
8. Rules that may apply to this job: [state building or security of payment rules checked on DD/MM/YYYY]

Agreed by: [customer name, date]   [your name, date]

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Common questions

What are standard payment terms in Australia?

Business.gov.au does not set a standard. It gives examples such as up front, instalments, on delivery or after 30 days, and says to choose the terms that suit your business. Ask an industry association or business adviser if unsure.[1]

What are acceptable payment terms?

Acceptable terms are clear, agreed before work starts and written on your quote, contract and invoice, and they must fit any laws that apply to the job. For building and construction work, check your state's security of payment laws.[1][2]