The most common payment terms

When it comes to payment terms, there are a number of standard terms that are often used by freelancers for invoicing without a CVR or with a CVR number.

The most common ones are:

• Net 8 days: The customer must pay the invoice within 8 days of receipt.
• Net 14 days: The customer has 14 days to pay the invoice, giving a little more time to secure payment.
• Net 30 days: One of the most commonly used payment terms where the customer has 30 days to pay the invoice. This term is often standard in many industries, including municipalities.
• Due date: A specific date is set as the payment deadline, which is useful in cases where a fixed date is more appropriate than a specific period.
• Cash on delivery: Payment must be made immediately upon delivery of services or products. This is often used for smaller jobs or sales of goods.

The choice of payment terms often depends on your relationship with the customer and your own needs. It's important to choose a term that both fits your business model and is realistic for the customer to meet.

How do you choose the right payment terms?

Choosing the right payment terms is a balancing act between your needs as a freelancer and your clients' expectations and possibilities.

Here are some considerations you should take into account:

• Customer profile: If you work with a large company, it's often standard to have longer payment terms, such as "Net 30 days". However, smaller businesses or private individuals may find it easier to pay faster and "Net 8 days" or "Net 14 days" may be more appropriate.
• The scope of the project: For larger projects where payment covers a longer period, it may be appropriate to have longer payment deadlines, possibly combined with milestone payments. For smaller projects or one-off tasks, shorter deadlines may be more practical.
• Your own liquidity needs: Consider how quickly you need the money. Sometimes, it may be necessary to require faster payments. Alternatively, you can offer a discount for prompt payment as a way to ensure liquidity.
• Industry practices: It can also be helpful to research what is common in your industry. Following industry standards can help avoid negotiations and conflicts over payment terms.

See also our invoice template.

How to specify payment terms on an invoice

When creating an invoice or electronic invoice, it's important to clearly state the payment terms to avoid misunderstandings and delays.

Here's a step-by-step guide on how to correctly specify payment terms on your invoice:

1. Place the payment terms clearly: Payment terms should be easy to find on the invoice, preferably near the invoice amount or at the end of the invoice where other important details such as payment information can also be found.
2. Use precise and understandable wording: Make sure your payment terms are clearly worded. For example: "Payment term: 14 days from invoice date" or "Net 30 days". Avoid ambiguous terms that can cause confusion.
3. Include consequences for late payment: If you have rules for interest or late payment fees, this should also be clearly stated on the invoice. For example, "Late payment will incur interest of 1.5% per month."
4. Specify payment methods: Specify which payment methods you accept, such as bank transfer, MobilePay or PayPal. This makes it easier for the customer to complete the payment correctly and quickly.

At Factofly, we can also take care of your invoicing, so you don't have to worry about payment terms, reminders or collecting payment from your customers. We take care of that, so you don't have to worry about it.

What happens if payment terms are not met?

Even with clearly defined payment terms, it can happen that a customer does not meet the deadline. When this happens, it's important to act quickly and professionally.

Here are some steps you can take:

• Send a friendly reminder first: Often late payments are simply due to forgetfulness. A polite reminder via email can often be enough to get the payment done. Make sure to attach your invoice again.
• Send a reminder letter: If the first reminder doesn't lead to payment, the next step is to send a reminder letter. Here you can make it clear that payment is due and reiterate any reminder fees or interest that you will impose if payment is not made by a new deadline.
• Impose interest and fees: If your payment terms include interest or late payment fees, you can start charging these. However, it's important to ensure that these are clearly stated on the original invoice.
• Consider legal action: If the customer continues to not pay, you may consider taking legal action. This may involve sending the matter to debt collection or even considering legal action. However, this should be a last resort as it can be both time-consuming and expensive.
• Prevent future problems: Consider reassessing your payment terms and relationship with the customer. In some cases, it may be necessary to require prepayment or shorten payment terms for future projects.

Tips to secure faster payments

Securing fast payments is crucial, especially for freelancers and self-employed people who may not have a fixed income.

Here are some tips to help you get your payments faster:

• Be consistent with invoicing: Make sure to send invoices immediately after the work is completed. The sooner the invoice is sent, the sooner payment can be made. At Factofly, we can do the invoicing for you, so you don't have to worry about whether your customers get paid.
• Set clear and short payment deadlines: Long payment deadlines can lead to delays. Consider setting the deadline to "Net 8 days" or "Net 14 days" instead of 30 days, unless industry standards require longer deadlines.
• Get a prepayment or deposit: For larger projects, it can be a good idea to require a percentage of the amount paid upfront. This ensures that you receive some payment before work begins and shows the seriousness of the client.
• Invoicing with Factofly: If you use our invoicing service at Factofly, we provide automatic reminders that are sent to the customer when a payment deadline is approaching or has passed.
• Be clear about the consequences of late payment: Make sure your customers know what the consequences are for late payment, such as reminder fees and interest. This can encourage timely payment.

Legal aspects of payment terms

When designing payment terms on your invoices, it's important to be aware of the legal aspects that can affect both you and your customers.

Here are some key legal considerations:

• Statutory payment terms: In Denmark, the standard payment deadline is 30 days, unless otherwise agreed between the parties. It is therefore important to state a specific payment deadline on the invoice if it is to deviate from the standard.
• Timely delivery of invoice: Under Danish law, the invoice must be issued as soon as possible after delivery of a good or service. Delays in invoicing may affect your right to claim payment and impose interest.
• Interest and reminder fees: If a customer does not pay within the payment deadline, you are entitled to charge interest and possibly a reminder fee. The statutory default interest rate in Denmark is the National Bank of Denmark's lending rate plus 8 percentage points. You can also charge a reminder fee of up to DKK 100 per reminder letter.
• Inclusion of necessary information: An invoice must contain specific information to be valid, including the invoice number, date, description of services or goods, and the total amount including VAT. The payment terms should also be included here.
• Protection against loss: If you're worried that a customer won't pay, consider using a credit rating or requiring prepayment. Alternatively, you can insure against loss by using debtor insurance.

By following these legal requirements, you can ensure your invoices are valid and protect your right to receive payment, even in the event of disputes or delays.

How Factofly can help you manage payment terms

Hos Factofly we understand how important it is for freelancers and self-employed people to get payment terms under control so you can focus on what you do best - your work.

We offer a range of services to help you manage your payment terms and ensure you get paid on time.

With Factofly on your side, you can ensure your payment terms are met so you can get paid what you've worked for - hassle-free.

You're welcome!

FAQ - Frequently asked questions