8 Contract Payment Clause Templates
Copy-and-paste payment clauses for freelancers, consultants, and small businesses. Each clause includes the actual contract language, an explanation of what it does, when to use it, and notes on customization.
These templates are provided for informational purposes and are not legal advice. Have an attorney review your contracts before use.
1. Deposit Requirements
What it does
This clause requires the client to pay a percentage of the total project fee upfront before any work begins. It protects you from starting work on a project that the client later abandons, and it signals that the client is financially committed.
Clause language
DEPOSIT AND COMMENCEMENT OF WORK A non-refundable deposit of [25% / 50%] of the total project fee, equaling [DOLLAR AMOUNT], is due upon execution of this Agreement. Payment of the deposit shall be made via [bank transfer / credit card / check] within [3] business days of signing. Work shall not commence until the deposit has been received in full and confirmed by the Service Provider. The deposit shall be applied toward the total project fee. In the event that the Client terminates this Agreement after work has commenced, the deposit is non-refundable and shall be retained by the Service Provider as compensation for scheduling, planning, and any work completed to date.
When to use
Use on every project, especially with new clients or projects over $1,000 where you need to block time on your calendar.
Customization notes
- Adjust the percentage based on project size — 25% for larger projects, 50% for smaller ones.
- Specify your preferred payment method to avoid delays.
- For very large projects, consider a three-part deposit structure (e.g., 40% upfront, 30% midpoint, 30% on completion).
- Some jurisdictions limit non-refundable deposits — check your local consumer protection laws.
2. Milestone Payments
What it does
This clause breaks a project into defined phases, with payment due at the completion of each milestone. It keeps cash flowing throughout the project and limits your financial exposure if the client disappears mid-project.
Clause language
MILESTONE PAYMENT SCHEDULE The total project fee of [TOTAL AMOUNT] shall be paid in installments according to the following milestone schedule: Milestone 1 — [Discovery / Planning]: [AMOUNT] due upon completion of [DELIVERABLE]. Milestone 2 — [Design / Draft]: [AMOUNT] due upon completion of [DELIVERABLE]. Milestone 3 — [Development / Revisions]: [AMOUNT] due upon completion of [DELIVERABLE]. Milestone 4 — [Final Delivery]: [AMOUNT] due upon delivery of [DELIVERABLE]. Upon completion of each milestone, the Service Provider shall notify the Client in writing. The Client shall have five (5) business days to review the deliverable and either approve it or request revisions within the original scope. If the Client does not respond within five (5) business days, the milestone shall be deemed approved and payment shall be due immediately. The Service Provider reserves the right to pause all work on subsequent milestones until payment for the current milestone has been received in full. Any delays caused by non-payment shall extend the project timeline accordingly.
When to use
Use on projects lasting more than two weeks or valued at more than $2,500, where a single upfront deposit and final payment structure would leave too much risk.
Customization notes
- Define milestones around tangible deliverables the client can review, not vague phases.
- Weight payments toward the front of the project — e.g., 30% / 30% / 20% / 20% rather than equal quarters.
- The 5-business-day approval window prevents indefinite delays; adjust if your industry standard is different.
- Add a line about revision limits if milestone approval is being abused to request unlimited changes.
3. Net Terms
What it does
This clause establishes the standard payment window — how many days the client has to pay after receiving an invoice. Net 15 or Net 30 are the most common terms for freelancers and small businesses.
Clause language
PAYMENT TERMS All invoices are payable within [15 / 30] days of the invoice date ("Net [15 / 30]"). The invoice date shall be the date appearing on the invoice as issued by the Service Provider. "Payment received" means the funds have been deposited and cleared in the Service Provider's designated bank account. Payments in transit or pending processing do not constitute payment received. Accepted payment methods: [bank transfer (ACH/wire), credit card, PayPal, check]. The Client is responsible for any transaction fees imposed by the Client's bank or payment processor. Invoices shall be sent to [CLIENT EMAIL OR BILLING CONTACT] and shall include a unique invoice number, description of services rendered, amount due, and payment instructions.
When to use
Use as the default payment structure for ongoing client relationships, retainer-style work, or any project where you invoice after work is completed.
Customization notes
- Net 15 is better for cash flow; Net 30 is more common with larger companies that have internal AP processes.
- Avoid Net 60 or Net 90 unless the client is a major enterprise and you can absorb the cash flow delay.
- Specifying that the client covers transaction fees prevents surprises on international wire transfers.
- Always define what "received" means — this prevents arguments about checks "in the mail" or pending transfers.
4. Late Fees
What it does
This clause charges interest on invoices that are not paid by the due date. It creates a financial incentive for clients to pay on time and compensates you for the cost of carrying unpaid receivables.
Clause language
LATE PAYMENT FEES If payment is not received within [3 / 5] business days after the due date (the "Grace Period"), a late fee of [1.5% / 2%] per month shall be applied to the outstanding balance, calculated from the original due date. Late fees shall compound monthly on the outstanding balance, including any previously accrued late fees. [OPTIONAL: In accordance with applicable law, the total accumulated late fees shall not exceed [PERCENTAGE]% of the original invoice amount.] The Service Provider reserves the right to suspend all work in progress until the overdue balance, including any accrued late fees, has been paid in full. The Client shall also be responsible for any reasonable collection costs, including attorney's fees, incurred by the Service Provider in pursuing overdue payments. The Client's obligation to pay late fees survives termination of this Agreement.
When to use
Include in every contract. Even if you rarely enforce it, having a late fee clause in writing encourages on-time payment and gives you leverage in collections.
Customization notes
- Check your state or country's usury laws — some jurisdictions cap the interest rate you can charge (often around 18% annually, or 1.5% per month).
- The grace period shows good faith; 3-5 business days is standard and accounts for minor payment processing delays.
- 1.5% per month (18% APR) is the most commonly accepted rate in freelance contracts.
- The collection costs clause is critical — without it, pursuing small debts may cost more than the debt itself.
5. Kill Fees
What it does
This clause guarantees you compensation if the client cancels the project after work has begun. It covers the opportunity cost of turning down other work and the time you invested that cannot be billed elsewhere.
Clause language
CANCELLATION AND KILL FEE Either party may terminate this Agreement by providing written notice to the other party. In the event of termination by the Client after the completion of the initial [discovery / planning] phase: (a) The Client shall pay the Service Provider for all work completed through the date of termination, calculated at the agreed project rate or hourly rate specified in this Agreement. (b) In addition to payment for completed work, the Client shall pay a kill fee equal to [25% / 50%] of the remaining unpaid balance of the project fee. This kill fee compensates the Service Provider for lost opportunity, scheduling disruption, and resources allocated to this project. (c) The kill fee and all outstanding invoices shall be due within fifteen (15) calendar days of the date of the written cancellation notice. (d) Upon receipt of the kill fee and all outstanding payments, the Service Provider shall deliver all completed work product to the Client, and intellectual property rights shall transfer per Section [X] of this Agreement. This clause shall not apply to termination for material breach by the Service Provider.
When to use
Use on projects where you are blocking significant calendar time, turning down other work, or hiring subcontractors who also need to be compensated if the project is canceled.
Customization notes
- 25% of the remaining balance is standard for shorter projects; 50% is appropriate for multi-month engagements where you have turned down other work.
- Define the trigger point clearly — the kill fee should activate after the discovery phase, not from day one.
- Include the IP transfer clause so the client gets what they paid for, and you are not holding deliverables hostage.
- Consider adding a minimum kill fee amount for small projects where a percentage might be negligible.
6. Scope Creep Billing
What it does
This clause defines how work that falls outside the original project scope is handled and billed. It prevents the common problem of a project ballooning in size without a corresponding increase in payment.
Clause language
SCOPE OF WORK AND CHANGE REQUESTS The scope of work for this project is defined in [Exhibit A / the attached Statement of Work]. All tasks, deliverables, and specifications described therein constitute the agreed scope ("In-Scope Work"). Any work not explicitly described in the scope of work is considered out-of-scope ("Additional Work"). The Service Provider is not obligated to perform Additional Work without a written change request. CHANGE REQUEST PROCESS: (a) Either party may propose Additional Work by submitting a written change request describing the requested work. (b) The Service Provider shall respond within [3] business days with a cost estimate and timeline impact. Additional Work shall be billed at a rate of $[HOURLY RATE] per hour, or as a fixed fee to be agreed in writing. (c) No Additional Work shall commence until the Client has approved the change request in writing (email is acceptable). (d) Approved change requests become part of this Agreement and are subject to the same payment terms. (e) If the Client requests changes verbally or via informal channels, the Service Provider shall respond with a written change request for approval before proceeding. Minor clarifications and bug fixes that are reasonably within the spirit of the original scope are not considered Additional Work.
When to use
Use on every fixed-price project. This is non-negotiable. Scope creep is the number one reason freelancers end up working for below their rate.
Customization notes
- Attach a detailed Statement of Work — the more specific your scope definition, the easier it is to identify out-of-scope requests.
- The written approval requirement is the most important part; verbal approvals lead to disputes.
- Set your Additional Work hourly rate higher than your effective project rate to discourage scope creep and compensate for context-switching.
- The "minor clarifications" exception shows good faith and prevents you from nickel-and-diming the client on trivial requests.
7. Rush Fees
What it does
This clause establishes a premium for work that needs to be completed faster than your normal timeline. Rush work disrupts your schedule, often requires evening or weekend hours, and displaces other client work.
Clause language
RUSH FEES AND EXPEDITED WORK The standard timeline for this project is [NUMBER] [business days / weeks] from the project start date, as defined in the scope of work. If the Client requests delivery in less than [PERCENTAGE, e.g., 75%] of the standard timeline, or requires work to be performed outside of normal business hours to meet a deadline, a rush fee shall apply. The rush fee is equal to [25% / 50%] of the project fee (or the applicable portion of the project fee for milestone-based work) and is in addition to the base project fee. Rush fees must be agreed upon in writing before the expedited work begins. Once approved, rush fees are non-refundable, even if the Client later extends the deadline or reduces the scope of the rush request. The Service Provider reserves the right to decline rush requests that cannot be reasonably accommodated without compromising the quality of the deliverables.
When to use
Use whenever you offer creative, development, or consulting services where clients may need faster-than-normal turnaround, especially around product launches, events, or fiscal year deadlines.
Customization notes
- Define "rush" relative to your standard timeline — if your normal turnaround is 2 weeks, anything under 7-8 business days qualifies.
- 25% is a reasonable rush premium for moderate acceleration; 50% is appropriate when the work requires evenings, weekends, or deprioritizing other clients.
- The non-refundable clause is important because you have already rearranged your schedule to accommodate the rush.
- Include the right to decline — not every project can be rushed without quality suffering.
8. Retainer Terms
What it does
This clause establishes a recurring monthly engagement where the client pre-pays for a set number of hours. Retainers provide predictable income for you and guaranteed availability for the client.
Clause language
RETAINER AGREEMENT The Client agrees to retain the Service Provider on a monthly basis under the following terms: MONTHLY RETAINER FEE: $[AMOUNT] per month, due on the [1st / 15th] of each month, payable in advance. INCLUDED HOURS: The retainer fee covers up to [NUMBER] hours of work per calendar month. UNUSED HOURS: Unused hours do not roll over to subsequent months. The retainer fee is due in full regardless of whether the Client utilizes all included hours. OVERAGE RATE: Work exceeding the included hours shall be billed at a rate of $[HOURLY RATE] per hour. The Service Provider shall notify the Client when [80%] of the monthly hours have been utilized. Work beyond the included hours requires written approval from the Client. BILLING CYCLE: The retainer period runs from the [1st] to the [last day] of each calendar month. Overage hours, if any, shall be invoiced separately at the end of the billing cycle and are subject to the payment terms in Section [X]. MINIMUM COMMITMENT: This retainer agreement requires a minimum commitment of [3 / 6] months. Either party may terminate the retainer by providing [30] days' written notice after the minimum commitment period has elapsed. SCOPE OF WORK: Retainer hours may be used for [LIST OF SERVICES]. Work falling outside the defined service categories is subject to separate scoping and pricing.
When to use
Use when a client needs ongoing, recurring work and you want predictable monthly income. Common for marketing, development support, consulting, and design services.
Customization notes
- Set the included hours slightly below what you expect the client to use — this makes overages the norm rather than the exception.
- The no-rollover policy is standard and prevents clients from stockpiling hours and then requesting a massive deliverable in a single month.
- The 80% utilization notice is a courtesy that builds trust and gives the client a chance to prioritize remaining hours.
- A 3-month minimum commitment protects you from clients who sign a retainer, get one month of heavy work done, and then cancel.
Quick reference
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