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Overview
How to Structure Payment Terms Correctly: Templates & Legal Pitfalls
Outstanding invoices put a strain on a company’s liquidity. Yet many invoices are paid too late—often because payment terms are unclear. This article shows you how to draft legally compliant payment terms, provides sample wording, and explains how tools like KLEVERBILL automate the dunning process.
Valentin Bayh
4
min read
Contributors
Valentin Bayh
Managing Director | SFG Receivables Management
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Outstanding invoices strain company liquidity. Yet many invoices are paid too late – often because payment terms are unclear. This article shows how to formulate legally compliant payment terms, provides sample wording, and explains how tools like KLEVERBILL can automate dunning.
1. Why wording payment terms matters
Payment terms on invoices are not just a courtesy, but have legal consequences:
Statutory deadline: Without specification, § 286 BGB applies (30 days after receipt of the invoice).
Dunning process: Clear deadlines make collections easier.
Liquidity protection: The more precise the deadline, the faster cash comes in.
🔹 Important: Missing or incorrect wording can lead to delays or legal issues.
2. Formulating payment terms correctly – templates & examples
a) Standard formulations (with legal effect)
Deadline | Sample wording |
Due immediately | "The invoice amount is due immediately without deduction." |
14 days net | "Please transfer the amount to our account within 14 days." |
30 days net | "Payable within 30 days of the invoice date without deduction." |
Cash discount granted | "If payment is made within 10 days, we grant a 2% discount." |
b) Legally compliant wording for reminders
1st reminder: "Please settle the outstanding amount promptly by [date]."
2nd reminder: "Despite our reminder, the amount has not yet been received. Please transfer within 7 days."
Threat of collections: "In the event of non-payment, we reserve the right to take legal action."
3. Common mistakes with payment terms
❌ Incorrect cash discount calculation
"3% discount for payment in 14 days" → Must be calculated precisely.
❌ No payment deadline specified → Statutory deadline (30 days) applies – delaying receipt of payment.
❌ Unclear wording
"Please transfer soon." → No legal obligation.
✅ Solution: Use clear, standardized wording (see samples above).
4. Automation with KLEVERBILL: Faster dunning
Manual dunning takes time. Modern accounting software like KLEVERBILL helps with:
✔ Automatic reminders for overdue invoices.
✔ Payment term tracking for better liquidity planning.
✔ Legally compliant templates for invoices and reminders.
📌 Example: KLEVERBILL alerts you when an invoice is 14 days overdue – and automatically sends a reminder.
5. FAQ: Common questions about payment terms
a) Is "14 days net" legally binding?
Yes, provided it is clearly worded. The customer must pay within 14 days, otherwise they are in default.
b) Can I write "due immediately" on invoices?
Yes, but note: without a cash discount or rebate, this is standard. In B2B transactions, it is often uncommon.
c) What should I do if the customer does not pay?
1st reminder (friendly)
2nd reminder (set deadline) → collections/lawyer.
Conclusion: Clear deadlines = less payment delay
Use precise wording (e.g. "14 days net").
Avoid vague terms such as "soon transfer".
Automate dunning with tools like KLEVERBILL.
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