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Payment terms

Payment terms set how long a customer has to pay an invoice — 'net 30' means within 30 days. Many places cap them: in the UK and EU, business payment is due within 60 days unless agreed otherwise and not grossly unfair; US carrier tariffs may give at most 30 days; India limits small suppliers to 45 days.

Also called net 30, net 60, credit period, late payment interest, freight payment termsUpdated 13 October 2026

The legal limits

WhereLimitIf paid late
EU (Directive 2011/7/EU)60 days between businesses unless expressly agreed and not grossly unfair; 30 for public bodiesECB reference rate + at least 8 points, plus €40
UK (Late Payment Act 1998)Usually 60 days for businesses, 30 for public authorities; late 30 days after invoice if no date was agreedBank of England base rate + 8%, plus £40, £70 or £100
US motor carriers (49 CFR 377.203)15 days by default; a tariff may set up to 30 calendar daysThe rule sets the credit period only
India (MSMED Act 2006)No more than 45 days for micro and small suppliersCompound interest, monthly rests, at three times the RBI bank rate

Worked example: interest on three late invoices

UK: £5,000, 30 days late, interest from H2 2026 at 3.75% + 8% = 11.75% → £48.29 + £70 = £118.29 · EU: €12,000, 45 days late at 2.40% + 8% = 10.40% → €153.86 + €40 · India: ₹500,000, one month late at 3 × 5.75% = 17.25% → ₹7,187.50

Reference rates: Bank of England 3.75% (in force on 30 June 2026); ECB main refinancing rate 2.40% (in force on 1 July 2026); RBI bank rate 5.75%. UK and EU interest is simple, by the day.

The EU directive makes interest payable without the creditor needing to send a reminder, and fixes the reference rate for each half-year at the rate in force on 1 January or 1 July. UK statutory interest uses the official rate in force on 30 June or 31 December before the interest starts. The fixed sums depend on the debt: £40 below £1,000, £70 up to £10,000 and £100 above.

The mistake people make

Counting from the wrong day. Under UK law, with no agreed date, payment is late 30 days after the invoice or the delivery — so an invoice sent weeks after delivery doesn't buy extra time. Carriers lose money the other way: FedEx Freight's rules say a part-payment marked 'Paid in Full' is null and void as a settlement, so a short-paid freight bill stays open.

FAQ

Payment terms: common questions

What does net 30 mean?
The invoice is due in full within 30 days. Net 60 means within 60 days. The count usually starts from the invoice date, unless the contract says otherwise.
What is the maximum payment term in the EU?
60 days between businesses, unless expressly agreed otherwise and not grossly unfair to the supplier; 30 days for public authorities. Late payment carries interest at the ECB rate plus at least 8 points and €40.
How long do US shippers have to pay a motor carrier?
15 days by default under 49 CFR 377.203, including weekends and holidays. A carrier's tariff can set a credit period of up to 30 calendar days.

Sources

  1. Directive 2011/7/EU, combating late payment in commercial transactions — EUR-Lex
  2. Late commercial payments: charging interest and debt recovery — GOV.UK
  3. Late Payment of Commercial Debts (Interest) Act 1998, section 5A — legislation.gov.uk
  4. Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 — legislation.gov.uk
  5. Official Bank Rate history — Bank of England
  6. Key ECB interest rates — European Central Bank
  7. 49 CFR 377.203 — Extension of credit (Cornell LII)
  8. Micro, Small and Medium Enterprises Development Act 2006 — Ministry of MSME, Government of India
  9. Current rates — Reserve Bank of India
  10. FedEx Freight 100-Y Rules Tariff, effective 5 January 2026

Related terms

On Traqo: Freight Settlement shows transporters when each invoice will be paid, in their own portal.