Credit Management: #2 Configuring Right Payment Terms for Credit Control

Credit Management: #2 Configuring Right Payment Terms for Credit Control

Think about the last time you ordered something online and saw that little note at the checkout, "Pay on Delivery" or "Pay later".


It's simple, but it actually sets the tone. As a business owner, you know exactly when payment is expected.

Now, imagine a local printing shop that supplies business cards to offices around the town. Some clients pay immediately, while others take 30 days to clear invoices. If everyone pays on their own schedule, the shop's cash flow would become unpredictable overnight.

That's where Payment Terms become crucial. They define the rules for payment, set expectations upfront, and form the foundation of good credit management.

Why Setting up Payment Terms is Important? 

Payment terms are more than dates on an invoice. They are agreements that balance trust, flexibility, and financial control. They determine when payment is due, how it should be made, and what happens when the payment is delayed.


Setting up clear payment terms protects both sides of a transaction. Customers know exactly when payment is expected. On the other hand, businesses can forecast revenue, plan their expenses, and maintain a steady cash flow.

Even the best credit tracking system can't prevent delays or disputes when payment terms are vague or unclear.

Standard Payment Terms in Business  

While every industry defines terms differently, most of them follow familiar patterns. Let's look at the most common ones with examples to help you visualise them.


Immediate (Due on Receipt):

Payment is expected as soon as the invoice is issued. This is most popular in retail sales and one-time services.

For example, a freelance photographer delivers final photos and sends an invoice marked "Due on Receipt." The client pays immediately via card or online transfer.


Shot- Term Credits (Net 5/Net 7/Net10/Net 15):

These terms allow customers a short grace period to make payments. They are common in fast-moving businesses where the cash flow cycle is tight.

For instance, an event management company gives the office 10 days to pay after each event. This builds loyalty while keeping payments predictable.


Standard Credits (Net 30/Net 45/Net 60):

These are the most widely used payment terms in B2B sales. They give customers flexibility while ensuring the business has a steady cash inflow.

A software reseller issues invoices on Net 30 terms, giving customers a full month to pay while they plan their cash outflows.


End of the Month (EOM or Net 30 EOM):

Here, invoices are due a certain number of days after the end of the month they were issued. It simplifies accounting for customers handling multiple purchases.

Imagine a stationery supplier invoices schools throughout the month, but all payments are due 30 days after month-end, making bookkeeping easier for both sides.


Milestone or Progress-Based Terms:

Payments are linked to project stages rather than just dates.

A construction firm bills 20% upfront, 50% mid-project, and the remaining 30% at the end, ensuring steady cash while aligning with project delivery.


Downside of Improper Payment Terms 

Your payment terms directly influence your business's cash flow. To be precise, shorter terms improve liquidity but can strain customer relationships. Long-term improves customer flexibility but stretches receivables.


Setting up consistent and transparent payment terms helps businesses to avoid unpredictable gaps between invoices and payments.

Configure & Manage Payment Terms in Zoho Billing 

Defining and enforcing payment terms becomes easy when your billing system handles them automatically.

With Zoho Billing, businesses can:

  • Set flexible payment terms per customer or invoice.

  • Automate due date calculation based on chosen terms.

  • Show the payment terms clearly on the invoices and email notifications sent to customers.

  • Send automated reminders before and after the set due date.

  • Apply a late fee based on the due date.

  • Track receivables based on the ageing report to find customers with chronic delays.

By setting the right payment terms along with the automations, you can ensure that every credit sale has a timeline, every invoice is accountable, and every customer relationship is transparent.

A reasonable credit control starts not from cashing payments but from setting expectations early and managing them consistently.

Letting customers pay on credit is one side and allowing credits a threshold of credits is another leverage many businesses offer these days.


Notes
Up Next: Setting up Credit Limit for Customers. 


      Zoho Campaigns Resources


        • Desk Community Learning Series


        • Digest


        • Functions


        • Meetups


        • Kbase


        • Resources


        • Glossary


        • Desk Marketplace


        • MVP Corner


        • Word of the Day


        • Ask the Experts


          • Sticky Posts

          • Community Learning Series | Digest #5 — September 2020

            Dear customers, We're happy to bring you the September edition of our #CommunityDigest! Keep track of your subscription KPIs right from your smartphone: Last month, we enhanced our Android mobile app to help our customers get daily updates on their business health. We got to know from a lot of customers that this has made their job much more easier because they no longer have to keep a reminder to manually check on the previous day's revenue or activations. If you have not downloaded it yet, here's
          • Community Learning Series | Digest #4 - August 2020

            Dear customers, We hope you're staying safe and healthy. I'm happy to bring you the fourth edition of our #CommunityDigest with some brand-new updates from us. 1. Daily Business Updates (for Android users) The Zoho Subscriptions Android app has got a cool new update: You can now get a push notification to your smartphone that lets you know how many activations and cancellations have taken place, and what's the net revenue for the previous day. The best part is, you can tell the app when exactly you
          • Community Learning Series | Digest #3 - July 2020

            Dear customers, We hope you're staying safe and healthy. We're glad to bring you the July edition of our #CommunityDigest. New community members can view our previous newsletters here. This time, we have two major updates and three interesting topics for you: 1. Zoho Subscriptions Developer Community Since the inception of Zoho Subscriptions, our team believed that the recurring billing platform we provide should be able to offer an extensive API library that empowers businesses to automate most
          • Introducing: Community Learning Series | Digest #1 - May 2020

            Dear customers, We hope you are staying safe and healthy. Helping businesses manage their customer subscriptions more efficiently has always been, and always will be, our goal at Zoho Subscriptions. We strongly believe this is possible if we grow together as a community and share what we know with each other. To nurture this shared learning experience, here is our brand-new Community Learning Series! ​ Welcome to the first edition of our digest! Each edition of our community digest includes guides

          Zoho CRM Plus Resources

            Zoho Books Resources


              Zoho Subscriptions Resources

                Zoho Projects Resources


                  Zoho Sprints Resources


                    Zoho Orchestly Resources


                      Zoho Creator Resources


                        Zoho WorkDrive Resources



                          Zoho CRM Resources

                          • CRM Community Learning Series

                            CRM Community Learning Series


                          • Tips

                            Tips

                          • Functions

                            Functions

                          • Meetups

                            Meetups

                          • Kbase

                            Kbase

                          • Resources

                            Resources

                          • Digest

                            Digest

                          • CRM Marketplace

                            CRM Marketplace

                          • MVP Corner

                            MVP Corner




                            Zoho Writer Writer

                            Get Started. Write Away!

                            Writer is a powerful online word processor, designed for collaborative work.

                              Zoho CRM コンテンツ




                                ご検討中の方

                                  • Recent Topics

                                  • Unable to load a specific image

                                    Hi I am trying to upload an svg file, which reports that there is "a problem with the file", but does not say what sort of problem. I can't find anything which says which files are supported, so it may be it does not support svg. (which would be a real shame) The file itself will open in either Firefox or Chrome without problem. For the moment I am using a png file, which does not zoom well of course. David
                                  • Why does the Address field show the wrong map location even with a correct Pincode?

                                    I am noticing an issue with the Address field map in Zoho Creator. When I enter a city name that exists in multiple locations within the same state, the map sometimes points to the wrong area even if I have entered the correct Pincode. Currently, it seems
                                  • Archive Option in Conversation View

                                    Hello, I have a suggestion\request to add an "Archive Thread" button in conversation view of Zoho Mail. The best suggestion I have is to put an "Archive Thread" button next to the "Label Entire Thread" button in conversation view. Most users don't just
                                  • Outlook/Hotmail Blocking Zoho SMTP IPs (S3150)

                                    We are currently facing a serious deliverability issue with Zoho SMTP while sending transactional OTP emails for our production application. Emails sent to Outlook / Hotmail addresses are being rejected with the following error: 550 - 5.7.1 Unfortunately,
                                  • Outlook is blocking incoming mail

                                    Outlook is blocking all emails sent from the Zoho server. ERROR CODE :550 - 5.7.1 Unfortunately, messages from [136.143.169.51] weren't sent. Please contact your Internet service provider since part of their network is on our block list (S3150). It looks
                                  • Zoho Social API for generating draft posts from a third-party app ?

                                    Hello everyone, I hope you are all well. I have a question regarding Zoho Social. I am developing an application that generates social media posts, and I would like to be able to incorporate a feature that allows saving these posts as drafts in Zoho Social.
                                  • Temporarily rate limited due to IP reputation.

                                    We have suddenly started receiving the following Mail Delivery Status Notification: Diagnostic-Code: 4.7.650 The mail server [136.143.184.12] has been temporarily rate limited due to IP reputation. For e-mail delivery information, see https://aka.ms/postmaster
                                  • IMPORTANT: It doesn´t search for letters with portuguese characters.

                                    Some of my articles have for example the word "vídeo". But if I search for "vídeo" it doesn´t find them. If I search for "video" it does find them. Idealy, it should find the articles either way. But if I have to choose, it would be better to find the
                                  • IMPORTANT: It doens´t show full article name on search - Should add line break

                                    When we search for articles, it doesn´t show the full name. There should be a line break so the user can see the full article name, otherwise the user can´t know if that´s the article he/she is looking for. This is very important, otherwise the user has
                                  • Zoho Books - Payment Gateway - Revolut

                                    Hi Books Team, My feature request if to include the popular platform Revolut as a payment collection option on invoices in Zoho Books. Please upvote if you are also looking for this option.
                                  • Zoho Books | Product updates | January 2026

                                    Hello users, We’ve rolled out new features and enhancements in Zoho Books. From e-filing Form 1099 directly with the IRS to corporation tax support, explore the updates designed to enhance your bookkeeping experience. E-File Form 1099 Directly With the
                                  • Kaizen #233 - Generating AI-powered Follow-up Emails Using CRM Functions and Widgets

                                    Hey everyone! Welcome back to another interesting post in the Kaizen series! Sales teams regularly capture interaction notes in CRM after speaking with prospects. However, drafting a follow-up email that reflects the conversation context can be repetitive
                                  • Connect Bank in Zoho Books

                                    Can I connect UOB or Ariwallex in Zoho Books?
                                  • Using MPN across multiple SKUs and inventory tracking

                                    I have several different SKU's that share a common MPN and would like to track inventory by MPN. SKU1 has MPN1 assigned SKU2 has MPN1 assigned Here is an example If I start with 5 of MPN 1 in stock I want each SKU1 and SKU2 to show as 5 in stock, If I
                                  • Marketing Tip #1: Optimize item titles for SEO

                                    Your item title is the first thing both Google and shoppers notice. Instead of a generic “Leather Bag,” go for something detailed like “Handcrafted Leather Laptop Bag – Durable & Stylish.” This helps your items rank better in search results and instantly
                                  • Feature Enhancement Request – Text Formatting Options in Item Description (Zoho Books/Quotes Module)

                                    Dear Zoho Development Team, Greetings from Radiant360 Integrated Technical Services LLC. We would like to bring to your attention a functional limitation we've encountered within the Item Table / Quote Description section of Zoho Books (and Zoho CRM Quotes).
                                  • ZOHO Books Query

                                    Good day, Can someone please advise. I recently migrated from ZOHO Invoice to ZOHO Books. No that I want to use the inventory on Books I cant as all my items have transaction history. The person I spoke to at ZOHO said I need to create a new Company profile
                                  • Best way to schedule bill payments to vendors

                                    I've integrated Forte so that I can convert POs to bills and make payments to my vendors all through Books. Is there a way to schedule the bill payments as some of my vendors are net 30, net 60 and even net 90 days. If I can't get this to work, I'll have
                                  • inventory removal at packing list or shipment.

                                    currently our system is set to remove inventory at invoice. This is creating an inventory nightmare? Is it possible to change the settings to remove the item from inventory at either the packing slip stage or shipping the item.
                                  • How to add employee and not invite them to log in?

                                    I want to add 50 employees, but invite them only when everything will be configured and ready. Is it possible? Should we create employee profiles and then convert them later? Thank you,
                                  • Any Offline Developing Environements or IDE's for Zoho Creator

                                    Hi there, Is there any offline developing environment for zoho creator like the Eclipse for sales force.com? So that i could make my development faster. Its taking a laot of time to write save and verify the code in Zoho Creator online. Thanks in advance
                                  • How is Your eCommerce Experience w/Zoho Inventory?

                                    First off, I'm SUPER grateful for the advent of Zoho Inventory and now the Zoho Commerce Suite. Overall, Inventory is a great product, especially for customers without an eCommerce presence. For eCommerce companies (especially those shipping more than ~10 packages/day), however, there are certain drawbacks that keep my clients from moving over to Zoho Inventory: Cons: 1. Invoice + Package Creation from Shopify/Other eCommerce Integrations: Zoho Inventory makes the somewhat perplexing decision to
                                  • Ability to Use Both AND and OR When Creating Rules (Advanced Conditions)

                                    I'd like to be able to use more complicated logic when setting up rules. E.g. in Zoho Mail, I can choose "Advanced conditions (AND/OR) to create a rule that can be applied to multiple subject lines from the same sender. But in Zoho TeamInbox, I will have
                                  • Zoho Desktop App- Unable to Minimize/Freezes

                                    I'm having issues with my Zoho Mail desktop app (PC). When go on my desktop and open the app this is what happens: - Unable to minimize and close app (in the screenshot attached you can see at the top right there is no option to minimize/close) - Unable
                                  • Zoho Invoice Zapier Integration

                                    Is there still a way to use Zapier with Zoho Invoice? I've read online that that migrated to Zoho Books or Billing but since I am just using Invoice I can not find a Zapier Connection anymore.
                                  • Conect chat of salesiq with zoho cliq

                                    Is there any way to answer from zoho cliq the chat of salesiq initiated by customers?
                                  • Bug: OAuth 2.0 State Parameter fails with Pipe Delimiters (RFC 6749 Non-Compliance)

                                    I've discovered a bug in how Zoho's API Console handles the OAuth 2.0 authorization flow when the state parameter contains pipe characters (|), and I'm hoping the Zoho team can address this in a future update. The Issue Zoho's OAuth 2.0 implementation
                                  • Zobot with Plugs

                                    Hello, I am having a problem with Zobot using Plugs. Here is my current flow: When I run the flow, I should immediately see the messages from the initial cards (Send Message cards), then after running the plug, and finally, see the messages after the
                                  • Print a document from Zoho Writer via Zoho Creator

                                    If i use the code below i can get writer to create a new document or email it to me but i want to be able to print it directly from the browser and not have to send it via email and then print. Below is the code im using. Attached options form zoho writer
                                  • Training for How can i Operate the Software Features

                                    need to Help for Training of the ZOHO Billing Software
                                  • Automating Vendor Contract Management between Zoho Contracts and Zoho Books using Zoho Flow

                                    Managing vendor agreements across procurement and finance systems often requires manually downloading executed contracts and attaching them to vendor records. This can become time-consuming and difficult to manage when dealing with a large number of contracts.
                                  • VIEW HEADERS PARAMETERS

                                    A function was created in zoho creator. In the microservices “https://creator.zoho.com/userhome/<adminuser>/admindashboard#/microservices”. A custom API was created and associate the function. In the postman I send some data, how can I visualize what
                                  • Problem applying batch operation error keeps looping that error

                                    Problem applying batch operation error keeps looping that error an wont login
                                  • Shared Email Sending Duplicate Copies of Emails

                                    Hi there, We recently have moved our info@ email to Team Inbox to trial. We set this channel up using the Microsoft setup which works fine and have 3 users. I am wanting to know: 1. When I send a new email, it will create a copy of that email and send
                                  • merhaba

                                    merhaba sosyal medya paketimiz mevcut ama yorumları göremiyoruz ve o yüzden cevap veremiyoruz destek rica ediyoruz.
                                  • Teaminbox not working

                                    We couldn't send or receive any mail within the team inbox. Displaying error 'Unable to process this request.'
                                  • Related lists New option in missing

                                    hi I have created quite a few modules and added as related lists to my main module. Some have new, some dont I can not see why?
                                  • Cliq and ToDo integrations?

                                    I'm a bit surprised not to find any way to open a Cliq chat for the current thread, or to create a Zoho Mail ToDo from a thread. Are these on the roadmap?
                                  • Reply-to names are mangled

                                    Hello, I'm seeing an odd behavior in replies. Steps to reproduce: 1. Click reply to an email from "John Doe <doe.john@example.com> in TeamInbox Expected outcome: TO field pre-filled with "John Doe <doe.john@example.com>" Actual outcome: TO field pre-filled
                                  • I CANT UPGRADE MY FREE ACCOUNT

                                    I TRY TO UPGRADE MY FREE ACCOUNT AND I COULD NOT UPGRADE IT CAN SOMEBODY TELL ME WHY? AND I HAVE THE MONEY SO.
                                  • Next Page