Terms and Conditions is a legally binding document that helps protect your business. If you own an online store, they’re especially important, because they define the conditions of sale of your e-commerce: shipping, returns and refunds, payment terms and conditions, and more.
In this article, we’ll take a closer look at the payment clause in terms and conditions, what it is, and how you can write it.
Payment Terms and Conditions basically outline how a business expects to be paid for its services or goods. They define all the conditions around payments, such as schedules, payment methods, and more.
In e-commerce stores, payment terms usually outline:
If you’re a freelancer or you work as a contractor, you may also have your payment terms and define how you accept payments for your services, any payment deadlines, or penalties for late payments. We’ll expand on this topic below, in the section about contract payment terms.
Having clear payment terms is essential for your business because your customers will know exactly what to expect when they buy from you.
To be effective, your terms and conditions of payment should be accessible and easy to read. Avoid using legalese and instead, write in a simple language that your customers can understand.
Then, make sure to include all the payment details that apply to your e-commerce. Every business is different and has different needs, but some common information for online stores is:
Moreover, make sure to add all the details about refunds and returns, shipping costs, and delivery.
An example of a simple payment terms clause can read something like this:
All orders must be paid in full at the time of checkout. We accept Visa, MasterCard, PayPal, and Apple Pay. Orders will not be processed or shipped until payment has been successfully completed. If payment is declined or fails for any reason, the order will be held for 48 hours while we attempt to resolve the issue. Customers will be notified immediately of any payment issues. Refunds for eligible returns will be issued to the original payment method within 14 business days of receiving the returned items.
As you can see, it’s a simple paragraph with all the necessary details.
However, keep in mind that having just payment terms and conditions may not be enough for your e-commerce. In order to comply with consumer regulations, you need to address all the information related to the conditions of sale, such as:
Now let’s take a look at some sample payment terms, to see how these elements come together.
As we said, the main instance where you’ll find payment terms and conditions is in online stores, as they define all the details about processing payments.
If you’re a contractor or freelancer, having solid payment terms can help you in your work. They define how you expect to be paid and any additional fees or discounts you may apply, ensuring your clients know exactly what to expect when they hire you.
For example, you may require a percentage of the bill to be paid in advance or apply a penalty for delayed payments.
Contract payment terms usually include the following clauses:
Invoice terms are linked to contract payment terms, since they define the methods of payment and its schedule. If you own a business, it’s important to understand the invoice terms, so that you can apply them properly.
Here below we’ve listed the main ones:
| Payment Term | Description |
|---|---|
| 15/30 MFI | Payment is due on the 15th or the 30th of the month following the invoice date |
| Upon Receipt | Payment is due immediately after the invoice is received |
| EOM | Payment is due by the last day of the month in which the invoice was issued |
| Net 7/10/30 | Payment is due within 7, 10, or 30 days of the invoice date. |
| 2/10 Net 30 | The client receives a 2% discount if payment is made within 10 days of the invoice date; otherwise, the full payment is due in 30 days. |
| PIA | The full payment must be made before the work or delivery of goods begins. |
| CIA | Similar to PIA, but specifically means that payment must be made in cash before the service or goods are provided. |
| 50% Upfront | The client must pay 50% of the total invoice amount as an advance payment before the work begins or goods are delivered. |
| Payment on Delivery (POD) | The client must make payment at the time of delivery of the goods or services. |
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