What are payment terms in a statement of work?

The section that says when each invoice is issued, the amount, the payment period, the currency, what each invoice must carry (such as a PO number), how expenses are billed, and where invoices are sent.

Should payment terms be in the SOW or the MSA?

Both, with different jobs. The MSA holds the rules for every project: the standard payment period, late interest, disputes. The SOW holds this project's fee, its invoice dates or events, the PO and the billing details.

What if the SOW and the MSA have different payment terms?

The MSA's order of precedence clause decides. Many say the MSA wins unless the SOW expressly changes a named section, so write "notwithstanding Section [x] of the Agreement" when you mean to change it.

Do I need a purchase order number on my invoice?

If the client issued one, yes. Large clients' payables systems match each invoice to a PO, and an invoice without it is usually returned. Ask for the PO before work starts.

What are typical payment terms for consulting services?

Fixed-fee work is usually invoiced on milestones with a payment at signature; hourly work monthly in arrears from accepted timesheets; retainers monthly in advance. Net 30 from the invoice date is a common period to ask for.

Is this legal advice?

No. It is practice from the services side. For a large or unusual contract, ask a lawyer licensed where the contract is governed.

SOW payment terms: clause examples to copy

Which payment terms go in the SOW, and which stay in the MSA#

What	Where it belongs	Why
The fee and how it is split	SOW	It changes with every project
When each invoice is issued	SOW	Milestones, months or timesheets are specific to the work
Payment period (net 30)	MSA, repeated in the SOW only to change it	One rule for the relationship; an SOW that differs must say so
Currency	SOW, if it can differ by project	A UK subsidiary may buy in pounds
PO number, bill-to entity, invoice address	SOW	Different projects can sit under different POs and budgets
Expenses: what is billable, approval threshold	SOW	Travel on one project, none on another
Late payment interest, right to pause work	MSA	Rules for the relationship, not one project
Disputes over an invoice	MSA	Same process for every invoice

The risk is a conflict. If the MSA says net 60 and the SOW says net 30, which one wins depends on the MSA’s order of precedence clause. Many MSAs say the MSA wins unless the SOW states that it changes a named section. So if you mean to change a term, name it.

When the SOW changes the MSA's payment period

Notwithstanding Section [x] (Payment) of the Agreement, invoices under this SOW are due within [thirty (30)] days after the invoice date. The parties intend this Section to prevail over Section [x] for this SOW only.

Payment terms for a fixed-fee SOW#

Fixed fee by milestones

Fees. The fees for the Services under this SOW are a fixed fee of [$total], payable in the installments set out in the Payment Schedule below. Provider shall issue each invoice on the date its event occurs, and each invoice is due within [thirty (30)] days after its date. Where an event depends on Client's action and is delayed by Client, the installment becomes payable on the long-stop date stated for it in the Payment Schedule.

The schedule itself, with an example, shares and a long-stop, is on the milestone payment schedule page. Two choices in the clause above matter more than they look:

“On the date its event occurs”, not “on completion of the project.” The second gives you one invoice at the end.
A long-stop for client delays. Without it, a fixed fee waits on approvals you do not control.

Payment terms for time-and-materials and retainer work#

Time and materials, invoiced monthly

Fees. Client shall pay for the Services at the hourly rates in the Rate Table. Provider shall send Client a timesheet for each week by the following Tuesday; a timesheet not disputed in writing within [five (5)] business days is accepted. Provider shall invoice on the first business day of each month for hours in accepted timesheets of the prior month. Fees under this SOW shall not exceed [$cap] without Client's written approval.

The timesheet rule is the part most SOWs leave out. Without it, a client can dispute last month’s hours when the invoice arrives, after the work is done and the people on it have moved on. With it, hours are settled weekly and the invoice only adds them up.

Monthly retainer, invoiced in advance

Fees. Client shall pay a monthly fee of [$amount] for up to [number] hours of Services each calendar month. Provider shall invoice the fee on the first business day of each month for that month, due within [fifteen (15)] days. Hours not used in a month [do not carry over / carry over for one month only]. Hours above the monthly allowance are billed at [$rate] per hour in the next invoice.

A retainer invoiced in advance is the one shape where the client pays before the work. It is worth defending: a retainer billed in arrears is monthly time and materials at a fixed price.

Expenses, for any model:

Expenses

Client shall reimburse Provider's reasonable travel and out-of-pocket expenses incurred for the Services, at cost and without markup, with receipts. Any single expense above [$500] requires Client's prior written approval. Expenses are invoiced monthly in arrears on a separate line.

What the client's procurement changes#

A client with a procurement team reads your payment section as a set of instructions for its payables system. What it usually sends back:

A purchase order number on every invoice. The PO is the client’s internal approval of the spend. An invoice without it, or with an amount above what is left on the PO, is returned or parked. Ask for the PO before work starts, and for its amount to cover the whole SOW.
A PO that ends with the fiscal year. A project that crosses the client’s year-end may need a second PO. Ask when their fiscal year ends, and put the date in your calendar.
Vendor setup. Before a first payment, a U.S. client will usually ask for a Form W-9, which gives it your taxpayer identification number for its information returns to the IRS,¹ plus your bank details and sometimes an insurance certificate. Send them with the signed SOW, not with the first invoice.
A supplier portal. Many large clients take invoices only through a portal. The portal’s fields become your invoice’s fields; an email to your contact does not count as submitted.
“Properly submitted.” Procurement will want the payment period to start when a correct invoice reaches it, not on the invoice date. Accept a list of what “correct” means, attached to the SOW, rather than a link to a guide they can change.
Their entity. The legal entity that signs may not be the one that pays. Write the bill-to entity in the SOW.

Purchase order and invoicing details

Invoicing. Client shall issue a purchase order covering the total fees under this SOW before the start date, and Provider shall state its number on each invoice. Provider shall address invoices to [Client's billing entity], [billing address], and submit them to [AP email or portal]. If Client has not issued the purchase order by the start date, Provider may invoice without it and Client's payment period is not extended. Client shall notify Provider in writing of any change to these details at least [fifteen (15)] days before it applies.

The last two sentences carry the weight. The first puts the cost of a late PO on the client, which owns the PO process. The second stops an invoice from being rejected because the address moved and nobody told you.

SOW payment terms example, filled in#

The companies are made up. A brand agency, Larkspur Studio LLC, signs SOW No. 2 with Ostrander Foods Inc. for a packaging redesign, fixed fee, under an MSA that says net 45.

5. Fees and payment.

5.1 The fee is a fixed fee of $58,000. Provider shall invoice $14,500 on signature of this SOW, $23,200 when Client approves the final design concepts in writing (expected in week 5), and $20,300 when Client accepts the print-ready files (expected in week 9).

5.2 Notwithstanding Section 6.1 of the Agreement, each invoice is due within thirty (30) days after the invoice date.

5.3 Client shall issue a purchase order for $58,000 before [start date]. Provider shall address invoices to Ostrander Foods Inc., Accounts Payable, and submit them to [AP portal].

5.4 Expenses: none expected; any expense requires Client's prior written approval.

5.5 Currency: U.S. dollars.

Five numbered lines, and a payables clerk can approve every invoice from them. For the sections around this one, use the free statement of work template.

Late payment: what the SOW says and what it leaves to the MSA#

Keep interest and the right to pause work in the MSA, where they cover every project. The SOW only needs one line that points there: “Section [x] (Late Payment) of the Agreement applies to all invoices under this SOW.” If your MSA has no late payment clause at all, or the client’s MSA struck it, the late payment fee clause page has the wording for the U.S. and the UK, and a fallback for when the client strikes it.

How Tommos reads the payment terms you signed#

In Tommos (tommos.ai), a CRM whose AI agents, the tommos, take a B2B inquiry to a signed contract, the payment section you wrote becomes the invoices. On the Sign plan, when a deal is won, Tommo Closer reads the signed SOW in the client’s folder and proposes the payment schedule on a card: each amount, its date or event, and its payment term. A person accepts or changes it. If the paper gives no terms, Tommo asks a person.

When an amount is due, Tommo proposes the invoice on a card with the recipient, the lines, the amount, the due date and the PO number. A person approves it before it is made in your invoice system (Mercury today), and again before the letter with the PDF and the payment link goes. For hourly work, the invoice is calculated from the timesheets your firm sent the client; a timesheet the client did not answer counts as accepted, and if a timesheet is missing when an invoice is due, Tommo asks a person for it.

How Tommo Closer works · Every plan

Questions about SOW payment terms#

What are payment terms in a statement of work?: The section that says when each invoice is issued, the amount, the payment period, the currency, what each invoice must carry (such as a PO number), how expenses are billed, and where invoices are sent.
Should payment terms be in the SOW or the MSA?: Both, with different jobs. The MSA holds the rules for every project: the standard payment period, late interest, disputes. The SOW holds this project's fee, its invoice dates or events, the PO and the billing details.
What if the SOW and the MSA have different payment terms?: The MSA's order of precedence clause decides. Many say the MSA wins unless the SOW expressly changes a named section, so write "notwithstanding Section [x] of the Agreement" when you mean to change it.
Do I need a purchase order number on my invoice?: If the client issued one, yes. Large clients' payables systems match each invoice to a PO, and an invoice without it is usually returned. Ask for the PO before work starts.
What are typical payment terms for consulting services?: Fixed-fee work is usually invoiced on milestones with a payment at signature; hourly work monthly in arrears from accepted timesheets; retainers monthly in advance. Net 30 from the invoice date is a common period to ask for.
Is this legal advice?: No. It is practice from the services side. For a large or unusual contract, ask a lawyer licensed where the contract is governed.

Key takeaways#

Put the fee, the invoice triggers, the PO and the billing details in the SOW; keep the rules in the MSA.
To change an MSA term for one project, name the section you change.
Use the clause for your pricing model; for hourly work, settle timesheets weekly.
Ask for the PO, the vendor forms and the billing entity before the start date.
For the whole path from signature to payment, read how to get paid on time.

Sources#

IRS, “About Form W-9, Request for Taxpayer Identification Number and Certification”, read Oct 15, 2026

The order of precedence point, the procurement list and the clauses are the author’s practice. The example’s companies and figures are made up.

SOW payment terms: what the section says, with wording to copy