I would advise all 'self employed' instructors to agree terms this must include:
(a) Invoice at the end of each week (Sunday), payment within 5 days by bacs(Friday) or 3 days by cheque (Wednesday). Remember the student pays, usually, after each sortie, so if the school can't pay, there probably insolvent. This was a great bit of advice from a solicitor friend a number of years ago.
(b) Insist on be paid for solo authorisations, if the student is paying dual for solo flying, while not qualified, you should be paid the full instructional rate.
(c) Agree, a fee for handling cash or credit card payments on behalf of students, Barclaycard charges 2%, so you should ask for the same cut.
(d) You could ask to be paid for refueling on say a 2% basis.
(c) Ensure that any briefings or training other than preflight briefing (>15 mins) should be charged for.
Finally, for those who are using instructing as a means to progress onto the airlines. Remember airlines are looking for people who can negotiate and are assertive. So at your airline interview you might need to explain, as a 'self employed' instructor, how you negotiated business terms with you flying school. An airline is not going to be impressed by someone who couldn't negotiate better than the minimum wage.