How to Set Up Proper Invoicing and Payment Terms for Your Irish Trade Business

Getting paid on time is the lifeblood of any Irish trade business. Poor payment terms and weak invoicing practices can destroy cash flow, damage customer relationships, and even force profitable businesses to close. This comprehensive guide covers how to establish professional payment terms that protect your business while maintaining good customer relationships.

From legal requirements under Irish law to practical strategies for different types of customers, this guide provides everything you need to optimize your payment processes and improve cash flow.

Understanding Irish Payment Legislation

European Communities (Late Payment in Commercial Transactions) Regulations

The key legislation protecting Irish businesses includes specific rights and remedies:

Automatic Rights:

• Interest on overdue payments at 8% + ECB base rate per annum
• Compensation for debt recovery costs (fixed amounts based on debt size)
• Right to retain title to goods until payment (where applicable)
• Right to refuse further work until overdue amounts are paid

Compensation Rates:

• €40 for debts up to €1,270
• €70 for debts from €1,270 to €12,700
• €100 for debts over €12,700
• Plus reasonable professional debt recovery costs

Consumer Protection Considerations

When working with domestic customers, additional protections apply:

• 14-day cooling off period for doorstep sales over €60
• Clear pricing information before work commences
• Written contracts required for work over €100
• Fair trading obligations under consumer protection law

Standard Payment Terms for Irish Tradesmen

Industry Standard Terms

Net 30 (Most Common):

• Payment due within 30 days of invoice date
• Suitable for established customers
• Allows time for customer processing
• Standard expectation in construction industry

Net 15 (Better Cash Flow):

• Payment due within 15 days
• Improves cash flow significantly
• May require customer negotiation
• Good for regular customers

Net 7 (Small Jobs):

• Payment due within 7 days
• Suitable for urgent/small repairs
• Requires customer agreement
• Risk of appearing too aggressive

Payment on Completion:

• Due immediately upon work completion
• Best cash flow option
• May require deposit/progress payments
• Not suitable for all customers

Payment Terms by Customer Type

Domestic Customers:

• Payment on completion or Net 7 preferred
• Cash, card, or bank transfer options
• Clear total cost communicated upfront
• Receipt provided immediately

Commercial Customers:

• Net 15 or Net 30 typically expected
• Purchase order numbers required
• VAT invoices if customer is VAT registered
• Monthly payment runs may apply

Construction Companies:

• Net 30 industry standard
• Retention amounts may be withheld
• Interim payments for long projects
• Final account processes apply

Structuring Your Payment Terms

Essential Components

1. Payment Period Clear statement of when payment is due:

• "Payment due within 30 days of invoice date"
• "Payment due by [specific date]"
• "Payment due on completion of work"

2. Accepted Payment Methods Specify how customers can pay:

• Bank transfer (include IBAN and BIC)
• Cash payments
• Card payments (contactless/chip & PIN)
• Cheques (if accepted)
• Online payment systems

3. Late Payment Terms Consequences of late payment:

• Interest rate and calculation method
• Fixed compensation charges
• Additional costs and fees
• Debt collection procedures

Payment Terms Template

PAYMENT TERMS

Amount Due: €[Amount]
Payment Due: [Date] / Within [X] days of invoice date

Accepted Payment Methods:
• Bank Transfer: IBAN IE29 AIBK 9311 5212 3456 78, BIC AIBKIE2D
• Cash payment to contractor on completion
• Card payment (contactless available)
• Cheque payable to "[Business Name]"

Late Payment Terms:
Interest charged at 8% per annum plus European Central Bank base rate on overdue amounts. Fixed compensation charge of €40 applies to debts under €1,270. Additional reasonable debt recovery costs may be charged.

Payment Queries: Contact [Name] on [Phone] or [Email]

Early Payment Incentives

Discount Strategies

2/10 Net 30:

• 2% discount if paid within 10 days
• Otherwise due in 30 days
• Improves cash flow significantly
• Cost of discount: approximately 36% annual interest equivalent

Examples:

• "€1,000 due in 30 days, or €980 if paid within 10 days"
• "5% early payment discount for payment within 7 days"
• "€50 discount for cash payment on completion"

Calculating Early Payment Discounts

Formula: (Discount % ÷ Days Saved) × 365 = Annual Interest Equivalent

Example: 2% discount for 20 days earlier payment (2 ÷ 20) × 365 = 36.5% annual equivalent

Consider offering discounts when:

• Cash flow is more important than profit margin
• Administrative costs of chasing payments are high
• Customer relationships benefit from incentives
• Credit risk is reduced

Progressive Payment Structures

Deposit and Progress Payments

For Large Projects (Over €2,000):

• Deposit: 25% on contract signing
• Progress payments: 25% at key milestones
• Final payment: Balance on completion
• Retention: 5% held for defects period (commercial work)

Example Payment Schedule:

Total Contract Value: €10,000

Payment Schedule:
1. Deposit (materials): €2,500 - Due on signing
2. Progress payment 1: €2,500 - At 25% completion
3. Progress payment 2: €2,500 - At 50% completion  
4. Progress payment 3: €2,000 - At 90% completion
5. Final payment: €500 - 14 days after completion

Cash Flow Benefits

Advantages:

• Reduces financial risk
• Improves working capital
• Covers material costs upfront
• Demonstrates customer commitment

Implementation:

• Include in initial quotes
• Explain rationale to customers
• Use written agreements
• Monitor progress closely

Late Payment Management

Professional Reminder Process

Step 1: Friendly Reminder (5 days after due date)

Subject: Payment Reminder - Invoice [Number]

Dear [Customer],

This is a friendly reminder that payment for Invoice [Number] dated [Date] was due on [Due Date]. The outstanding amount is €[Amount].

If payment has already been sent, please ignore this reminder. If you have any queries about this invoice, please contact us immediately.

Payment can be made by bank transfer to:
IBAN: [Details]
Reference: [Invoice Number]

Thank you for your prompt attention to this matter.

Best regards,
[Your Name]

Step 2: Formal Notice (15 days after due date)

• More formal tone
• Reference to payment terms
• Specific deadline for payment
• Mention of late payment charges

Step 3: Final Demand (30 days after due date)

• Formal demand letter
• Legal consequences outlined
• Debt collection threats
• Stop work notices

Irish Debt Collection Rights

Self-Help Remedies:

• Retention of title (if goods not paid for)
• Suspension of further work until payment
• Set-off against other amounts owed to customer
• Interest and compensation charges

Legal Options:

• Small claims court (debts up to €2,000)
• District court (debts up to €15,000)
• Circuit court (debts over €15,000)
• Debt collection agencies (professional services)

Customer-Specific Payment Strategies

Domestic Customers

Best Practices:

• Clear upfront pricing with no surprises
• Payment on completion preferred
• Cash or card payments most common
• Invoice and receipt provided immediately
• Friendly payment reminders if needed

Red Flags:

• Reluctance to pay deposit
• History of payment disputes
• Requests for extended payment terms
• Poor communication during work

Small Business Customers

Approach:

• Net 15 or Net 30 terms typically acceptable
• Purchase order systems often required
• VAT invoices if both parties VAT registered
• Account applications may be required

Credit Checks:

• Check company registration status
• Review Credit Bureau reports
• Request trade references
• Set credit limits initially

Large Commercial Customers

Considerations:

• Net 30 to Net 60 terms often expected
• Purchase order systems mandatory
• Monthly payment runs common
• Retention amounts may be withheld

Contract Terms:

• Include in main contract agreements
• Specify retention release terms
• Define completion criteria clearly
• Include variation order procedures

Technology Solutions for Payment Management

Invoicing Software Features

Essential Capabilities:

• Automated reminders at specified intervals
• Payment tracking and aging reports
• Customer payment history records
• Integration with banking for payment matching
• Mobile access for on-site invoicing

Or you can send invoices in seconds with Manano - simply text us your job details via WhatsApp and we'll create and send a professional invoice with payment links instantly. Your customers can pay by card or bank transfer with just one tap.

Irish-Specific Requirements:

• Irish VAT rates and calculations
• Euro currency as default
• Irish address formats
• Revenue compliance features
• RCT integration for construction work

Online Payment Systems

Payment Gateways:

• Stripe (popular in Ireland)
• Square (growing presence)
• PayPal (widely accepted)
• Revolut Business (Irish-focused)

Benefits:

• Faster payments (often same day)
• Reduced administration (automatic reconciliation)
• Professional appearance (branded payment pages)
• Payment confirmation (automatic receipts)

Costs:

• Transaction fees (typically 1.4% - 3.5%)
• Monthly fees for some providers
• Setup costs for integration
• Currency conversion fees (if applicable)

Cash Flow Optimization Strategies

Invoice Timing

Best Practices:

• Issue invoices immediately upon work completion
• Send during business hours (Tuesday-Thursday optimal)
• Follow up quickly on overdue accounts
• Batch similar customers for efficiency

Skip the admin entirely - with Manano, you can create and send invoices in under 30 seconds via WhatsApp. No software to learn, no templates to manage, just text us your job details and we handle everything.

Timing Optimization:

• Avoid month-end invoicing (busy accounts departments)
• Consider customer payment cycles
• Invoice before weekends/holidays
• Use electronic delivery for speed

Credit Management

Customer Assessment:

• Initial credit checks for new commercial customers
• Credit limits based on payment history
• Regular review of customer credit status
• Insurance coverage for large exposures

Risk Mitigation:

• Deposits for new customers
• Progress payments for large jobs
• Personal guarantees from company directors
• Retention of title clauses

Common Payment Term Mistakes

1. Vague Payment Terms

Problem: "Payment due in 30 days" (from when?) Solution: "Payment due within 30 days of invoice date"

2. No Late Payment Consequences

Problem: No mention of late payment charges Solution: Clear interest rates and compensation amounts

3. Limited Payment Options

Problem: Only accepting cash or cheques Solution: Multiple payment methods including electronic options

Manano makes payment collection effortless - every invoice we send includes a "Pay Now" button for instant card or bank transfer payments. Your customers can pay in seconds, and you get the money faster.

4. Poor Follow-Up Procedures

Problem: Inconsistent or aggressive collection approaches Solution: Professional, systematic reminder processes

5. No Written Agreements

Problem: Verbal agreements only Solution: Written quotes with payment terms included

Industry-Specific Considerations

Construction Industry

Standard Practices:

• Net 30 payment terms
• Retention amounts (5-10% of contract value)
• Interim payment applications
• Final account procedures
• Defects liability periods

Emergency/Maintenance Work

Typical Terms:

• Payment on completion or Net 7
• Cash payment preferred
• Call-out charges apply
• Emergency rates clearly stated

Home Improvement/Renovation

Customer Expectations:

• Clear total costs before starting
• Progress payments for large projects
• Material deposits required
• Completion guarantees provided

Conclusion

Establishing proper payment terms is crucial for the success of any Irish trade business. The key elements include:

Legal Compliance:

• Understanding your rights under Irish law
• Implementing proper late payment procedures
• Maintaining professional standards throughout

Business Optimization:

• Choosing payment terms that suit your cash flow needs
• Offering appropriate early payment incentives
• Using technology to streamline processes

Customer Relationships:

• Clear communication of terms upfront
• Professional handling of payment issues
• Flexible approaches where appropriate

Risk Management:

• Appropriate credit checks for commercial customers
• Progress payment structures for large projects
• Professional debt collection when necessary

Remember that payment terms are not just administrative requirements - they're strategic business tools that directly impact your cash flow, customer relationships, and long-term success. Invest time in getting them right, and your business will benefit from improved cash flow, reduced bad debts, and stronger customer relationships.

Ready to transform your invoicing? Manano handles all the complexity for you - professional invoices, automatic payment reminders, instant payment collection, and full Revenue compliance. Just text us your job details and get paid faster than ever before.

Regular review and updating of your payment terms ensures they remain effective as your business grows and market conditions change. Consider seeking professional advice for complex situations or when dealing with significant commercial contracts.