What is a payment schedule, and how does it work for your business?

A payment schedule sets out when a business customer will pay you, and how. Both sides agree it upfront, usually as part of a wider contract or invoice terms. Once it's set, everyone knows where they stand: you know when to expect payment, and your customer knows what they owe and by when.

A good payment schedule covers four things:

1. Payment amount

How much your customer owes. Whether that's the full invoice value or a portion of it if you're using instalments.

2. Due date

When each payment is expected. This might be a single date, or a few dates across a project or contract.

3. Payment frequency

How often payments happen throughout the duration of your contract. This could be weekly, fortnightly, monthly, or quarterly, depending on what suits the nature of the work and your cash flow requirements. In the UK, monthly payments are the most common standard for B2B services as they align with most corporate budgeting cycles.

For project-based work, you might set the frequency based on the completion of set stages or milestones. This ensures a steady flow of liquidity and reduces the risk of a large outstanding balance building up over time. Matching the frequency to your operational costs helps maintain a healthy working capital position and ensures that both parties have a clear timeline for financial obligations.

4. Total payment period

The start and end of the arrangement, so both sides know when the final payment is due and the schedule is complete.

Tip: If a due date lands on a weekend or bank holiday, it's common practice to move it to the next working day. If you build this in from the start, it will avoid confusion when Christmas or Easter comes around and your usual payment date doesn't fall on a working day.

Payment schedules can vary. It all depends on what you're being paid for, and how the work or delivery is spread out. Here are the three types you're most likely to use:

Instalment or loan schedules

These are common when a business is repaying finance rather than paying for goods or services delivered; for example, funding for equipment or premises. Payments are fixed and spread over an agreed term.

Stage payments

This tends to be the standard approach in project-based work, especially construction. Instead of one payment on completion, a staged payment schedule breaks the contract into checkpoints, which each trigger a payment once agreed work is done. This protects both sides: you're not waiting until the whole project finishes to get paid, and your customer isn't paying for work that hasn't happened yet.

Recurring and bill payment schedules

These are used when a business customer pays regularly for ongoing goods or services. That could be weekly deliveries, a monthly retainer, or repeat orders on standing terms. The schedule sets the day or when interval payment is due, so it becomes routine rather than something to chase each time.

How a payment schedule works in practice often comes down to the sector you're in. Here's what's typical across a few common ones:

Manufacturing

Schedules often follow delivery rather than a single order date. This could be a deposit up front, then instalments as a bulk order is fulfilled or shipped in stages.

Wholesale and distribution

Repeat orders tend to run on a rolling schedule, with payment due 30, 60 or 90 days after each delivery rather than settled individually.

Professional services

Work is often billed against project phases rather than a single invoice at the end. This could be a proportion due at kick-off, and then more as each milestone is delivered.

Construction

Payments are usually tied to milestones like foundations being laid or practical completion. Most contracts must include a proper stage payment mechanism with clear payment and notice dates, with a right to suspend work or claim interest if a payment is late.

For a better idea of what's shaping risk across these and other industries right now, see our latest UK sector risk outlook.

If you and your customer haven't agreed a payment schedule, UK law sets one for you. Under the Late Payment of Commercial Debts (Interest) Act 1998, a business-to-business invoice becomes due 30 days after the customer receives the goods or invoice, whichever is later, unless you've agreed different terms (though terms beyond 60 days can be challenged as unfair).

The same Act gives you the right to charge statutory interest on a late payment, along with a fixed compensation fee, without needing to renegotiate the contract first. Build this into your schedule at the beginning, so your customer knows what happens if a payment slips.

Larger businesses have a further obligation. Under the Payment Practices Reporting duty, qualifying companies must publish how they pay their suppliers, including average payment times and the proportion of invoices paid late. If you're supplying a larger business, this reporting can give you a better idea of what to expect before you agree a schedule.

Payment schedules and upcoming legal changes

Remember that UK payment law is changing. The Commercial Payments Bill, introduced to Parliament in May 2026, proposes a maximum 60-day payment period for commercial contracts and a ban on retention clauses in construction contracts.

It's still making its way through Parliament, so nothing has changed yet, but keep an eye on it if you're setting up schedules that run into 2027 and beyond.

To set up a payment schedule, start by finding out what's coming in and what's expected of you.

1. Begin with your obligations

Look at what your business is due to be paid, and by when. This includes one-off invoices as well as any recurring or staged arrangements you already have with regular customers.

2. Set your due dates

Once you know what's owed, you can agree dates that work for both sides. If you're setting a recurring schedule, it helps to let your customer choose a date each month that suits their own cash flow. They’re more likely to pay on time if the date works for them too.

3. Think about automation

You can set up automatic invoicing or payment reminders to keep things running smoothly, so you're not chasing every individual payment. Many accounting platforms let you build a schedule and let it run.

We're here if you'd like a hand thinking any of this through. A well-structured schedule is one of the simplest ways to keep your cash flow predictable, and it works even better as part of a general approach to credit risk management.

Simple payment schedule template

Here's a payment schedule example for a business supplying a customer on repeat orders:

Or, for a staged project instead of repeat orders:

Both versions rely on the same principle: agree it in writing before you extend credit, so both sides know exactly when payment is due. However, what a schedule can't do on its own is guarantee your customer pays it. And that’s why checking their creditworthiness upfront and protecting the invoice itself can be really useful.

Sometimes a schedule needs to change. Your business grows, a customer's circumstances shift, or market conditions call for a different approach.

If you do need to make a change, make sure you communicate it clearly and early, to give your customer time to adjust before the new schedule takes effect. A short, written note explaining what's changing and when usually does the job.

Once a schedule changes, review your own financial plans too, so your cash flow forecast reflects the new dates and amounts rather than the old ones.

Even with a definite schedule in place, payments don't always arrive on time. If that happens, you've got options, from a simple reminder through to statutory interest, and, in some cases, formal recovery action.

We cover this in detail in our guide to late payments, including what you can do at each stage and how to protect your cash flow if a customer falls behind. If non-payment is a bigger concern for your business, our guide to credit risk insurance covers how that protection works.

A well-run payment schedule gives you the confidence to keep offering credit terms, knowing you're in control of when money comes in. That's what lets you take on new customers, agree bigger contracts, and grow without second-guessing every invoice.

Trade credit insurance takes that a step further. If a customer doesn't pay for whatever reason, your policy replaces the money you're owed, so one missed schedule doesn't put the rest of your business at risk. It's part of a wider approach to credit protection that keeps your cash flow secure.

Find out more about trade credit insurance and how we can help you offer credit with peace of mind.