What are good payment terms for a small business in Australia?

Net 7 to 14 days is common and protects cash flow; net 30 is more competitive but increases your exposure. Higher-value orders justify shorter terms and a deposit. The right answer depends on your margins, your industry, and your customer's credit risk.

Can I charge interest on overdue invoices?

Only if your terms of trade expressly provide for it and the customer agreed to those terms before the sale. A common figure is 1.5% per month. Without a contractual clause, interest can generally only be claimed after a court judgment, at the statutory rate.

Do terms of trade need to be signed?

Terms are strongest when the customer acknowledges them in writing — typically via a signed credit application — before you extend credit. Referencing them on quotes and invoices helps, but a clear up-front acceptance is best.

Free generator

Payment Terms & Credit Policy Generator

Get recommended payment terms for your business and a copy-paste set of terms-of-trade clauses — net days, deposits, late-payment interest and retention of title — tuned to your risk appetite and average invoice value.

Your business

Business name

Industry

Average invoice value (AUD)

Credit-risk appetite

Take a deposit on orders

Charge interest on overdue accounts

Supply goods (add retention of title)

Recommended terms

Payment termsNet 14 days
Deposit30% upfront
Late interest1.5%/month
Securitynone

Copy-paste terms of trade

TERMS OF TRADE — [Your business name]

1. Payment terms. Unless otherwise agreed in writing, all invoices issued by [Your business name] are payable within 14 days of the invoice date.

2. Deposit. [Your business name] may require a deposit of 30% of the order value before work commences or goods are supplied. The balance is payable in accordance with clause 1.

3. Overdue accounts. Interest may be charged on overdue amounts at 1.5% per month (18% per annum), calculated daily from the due date until payment is received in full.

4. Recovery costs. The customer is liable for all reasonable costs of recovering an overdue amount, including collection-agency commission and legal costs.

5. Disputes. Any dispute about an invoice must be notified in writing within 7 days of the invoice date; otherwise the invoice is deemed accepted. Undisputed amounts remain payable on time.

Strong terms make recovery faster. If an account still goes overdue, Merion recovers it on a commission-only basis.

Refer a debt

Why your terms of trade matter

Clear, written terms of trade are the single most effective protection against late payment. They set expectations up front, give you a contractual basis to charge interest and recover costs, and make any later demand or recovery far stronger. This generator builds a sensible starting set from your risk appetite and average invoice value.

Putting them to work

Have new customers acknowledge your terms in writing before you extend credit.
Reference your terms on every invoice and quote.
Pair them with a credit application and, for larger accounts, a director's guarantee.

This generator produces general, illustrative terms only and is not legal advice. Have your terms of trade reviewed by a qualified adviser before relying on them — particularly interest, retention of title, and personal guarantee clauses, which must be drafted correctly to be enforceable.

Prevention + recovery

Strong terms. Backed by recovery.

Good terms reduce late payment; when an account still slips, Merion recovers it on a commission-only basis — no recovery, no fee.

Refer a debt Credit application template

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Putting them to work

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