Payment terms on invoices: what to put, and what is normal in New Zealand

Payment terms tell your customer when an invoice is due. In New Zealand the common ones are on completion, 7 days, 14 days, 30 days and the 20th of the following month. No law sets a standard. Your terms hold best when they sit in terms of trade your customer accepted before the work started.

What are payment terms?

Payment terms are the part of your arrangement with a customer that says when you get paid. They usually sit in your terms of trade and on your quote, and then show up again on the invoice so everyone is working to the same date. These are the ones you will see most often in New Zealand:

Payment in advance, or a deposit

All or part of the price before the work starts or the materials are ordered. The rest falls due on one of the terms below.

On completion, or same day

Due when the job is done. Common for call-outs, after-hours work and small jobs that were quoted and agreed beforehand.

7 days, or 14 days

Due seven or fourteen days after the invoice date.

30 days

Due thirty days after the invoice date. Accounting software and a lot of overseas websites call this “net 30”: the full amount, thirty days from the invoice.

The 20th of the following month

Due on the 20th of the month after the month the invoice is dated. An invoice dated 31 March is due 20 April, about 20 days later. One dated 1 March is due on the same day, about 50 days later. So somebody could be waiting anywhere between 20 and 50 days, and that is if it is paid on the due date.

Progress payments

On larger jobs, a payment at each agreed stage, so the money keeps pace with the work.

Whatever you choose, one pattern holds. The bigger the gap between doing the work and the invoice being due, the more likely your customer is to put paying you further down their list, and that is just as true in business and commercial work as it is with households.

Ask us about your terms

What to put on your invoice

Official guidance from business.govt.nz is to keep invoice details clear: what you provided, when, the cost, the due date and the payment terms. A few small choices make a real difference to how quickly that turns into money.

• A fixed due date. “Due on 15 April” reads far more clearly than “Due in 14 days”, which leaves your customer working out when the 14 days started.
• The payment terms themselves, matching what your customer agreed to in your terms of trade or on the quote.
• How to pay you. The easier you make it, the faster you will get paid.
• A window to raise a query. Seven days from the invoice to tell you if something is not right, or at least that they need time to check it. Keep it at seven days in your terms, and use your own judgment about any grace you give inside that.

Then send it the day the work is done, or the day after. We speak to plenty of business owners who say they definitely invoice on 7 days, and then it turns out the invoices only go out at the end of the month. Seven-day terms on a month-end invoice can mean five weeks before the money arrives. And if you send it the same day, it does not have to be seven days at all: due two or three days later can work perfectly well, whatever fits the way you work with your customers.

What are normal payment terms in New Zealand?

There is no standard set by law. No New Zealand law tells a business what payment terms to use, so the terms that apply are the ones you and your customer agreed. Historically the 20th of the following month has been the one most New Zealand businesses grew up with, and 7 and 14 days have become far more common, especially for trades and smaller jobs.

You may have heard of the Business Payment Practices Act 2023. It asked large businesses to report how quickly they paid their suppliers. It never set payment terms, and it was repealed in March 2024.

Construction work has one extra rule worth knowing. Under the Construction Contracts Act 2002, the parties are free to agree when each payment falls due (section 14), and the Act has default payment rules for where a contract says nothing. A “pay when paid” clause, where a head contractor only pays you once they have been paid, has no legal effect (section 13).

Where the 20th of the following month came from

The 20th of the following month is an old structure with no basis in law whatsoever. It comes from the days of manual invoicing. You would sit down with pen and paper, write up your invoices and post them. Your customer would read them, write a cheque and post it back. Then someone would take the cheque to the bank with the banking and wait three to seven days for it to clear. It physically took that long to get paid, so the 20th became the rhythm.

People often say it comes from the agricultural sector, but farming was simply one of the industries being paid that way, and it became ingrained there. Today you can get money across the world overnight, so there is no longer much of an excuse for leaning on the 20th by default. There will be industries where it stays the norm for a long time, agriculture and some larger firms among them. It just does not need to be everybody’s starting point.

Which payment terms suit which work

Plenty of businesses run one set of terms for every job, often the 20th, because that is what was set up years ago. It works far better to match the terms to the kind of work, and it is very normal to have several within one business.

• Small jobs, quoted and agreed beforehand: payment on completion. Your customer is happy with the work and agreed the price up front, so there is no reason to be finding the money after the fact.
• Call-outs and after-hours work: same day, on completion. There is nothing unreasonable about same-day payment. The only hard part is feeling awkward saying it.
• Smaller invoices: 7 days.
• Medium-sized work: break it into milestones, and shorten the terms from the 20th to something like 10 days.
• Larger or higher-risk work: a deposit, progress payments at each stage, and work pausing until each payment is processed. Where you are ordering in materials, prepayment beats seven days, or at the very least half before you order and the balance before delivery.
• Ongoing, regular work: invoice monthly in advance.

It also helps to charge in a way that matches how your customer earns. If you look after businesses that take money every day, such as restaurants, hospitality and retail, invoice them more often and make the due date shorter.

See how we can help with your terms of trade

Whose payment terms apply, and can a customer change them?

Payment terms are part of what you and your customer agreed, so they count when your customer saw and accepted them before the work started. Printing them on the invoice reminds the customer of what was agreed; on its own, it is often the first time they have seen them. Getting that acceptance right is covered on terms of trade in New Zealand, along with interest and collection costs on late payments.

Two situations catch people out. If you sign your customer’s supplier agreement or subcontract, their agreement is the ruling document, payment terms included, so read what it says about when you get paid before you sign. And a customer who wants different terms is asking to change the agreement. That is a conversation to have before the work, and it is one you are entitled to have on your own terms. Where it goes wrong is a customer trying to renegotiate payment terms after the work is already done, when the leverage has passed to them.

If you are thinking about shortening yours

Long payment terms often exist simply because they have always been there. Somebody set them up when the business was smaller, or they came with the business when it was bought, and nobody has looked at them since. That is a very normal way to arrive here. It is worth looking at what they actually cost you.

Payment terms stack. If the invoice goes out a month after the work because supplier invoices were late or it waited for the month-end run, and then the customer’s terms begin, thirty days to invoice plus the 20th of the month following is not a thirty-day wait. It is sixty, ninety, or more. Batching creates lag, lag creates carryover from one month to the next, and carryover puts pressure on your working capital. While you wait, you are funding the delivery of the work.

And the customers who are always a bit late? We hear “they pay late, but they always pay” all the time. It is still your money, sitting in someone else’s business while you cover the wages, the materials and the next job.

The other thing we see is inconsistency. If you tighten the terms for one client and soften them for another, you reinforce the old culture, and your customers learn which rules are real.

How to move to shorter payment terms

It’s okay to ask for a deposit. It’s okay to ask for a shorter due date. And it’s okay to break your jobs into smaller milestones so your cash flow moves faster. Moving away from the 20th is unlikely to be a flick of a switch, and it does not need to be. You are building commercial muscle a step at a time.

• Start with new customers and smaller work. For a long-standing customer on the 20th, bring in the shorter cycle on new or smaller jobs first.
• Frame it as a review of your business. Something like: “We’ve taken the opportunity to review how we structure payment timing across our business.” That is leadership language, and it lands far better than announcing that the 20th is gone.
• Apply it consistently, and look at it again every three to six months.

One electrician we know moved his new clients to 7 days, commercial and residential alike, at a time when others around him were struggling. He got a lot less pushback than he thought he would.

There is an honest limit too. If your own customer is paid on the 30th and pays you on the 20th of the month following, shorter terms are not always open to you yet. That is when deposits, smaller stages and invoicing the moment each stage is done carry more of the load, and when terms of trade that are actually in play matter most.

This page is education and commercial insight from our own research and experience, not legal advice. Do your own research, and get legal advice for your own situation.