Making Payment Terms Work For You

Oct 22, 2020
7 minute read

Using the right invoice payment terms can make sending invoices and receiving payment easier and faster. Here are a few tips and tricks to help the process.

Get paid fast with the right payment terms

As an entrepreneur, getting paid is one of the most exciting and frightening parts of the process. You can’t wait to literally get paid for doing what you love—but you’re feeling a little uneasy about asking people to give you money. Especially when they’re a few days late paying up.

You’re not alone. Xero says that invoices are paid late almost half the time, and Inc. says that 16 per cent of invoices will never be paid at all. Luckily, the law is on your side and having the right payment terms on your invoice can help give you the backing you need to get paid quickly and on time.

You deserve to get paid for all of the hard work you do. It’s time to arm yourself with the right information to make that happen. 

What are payment terms?

Payment terms are simply the conditions that need to be met when you, as the vendor, complete a sale. They outline when you expect payment, any conditions that exist on the payment (like late fees or early discounts), and any discounts that you’re giving the purchaser.

If you’re selling someone a candle from your physical location, chances are they’ll make payment and walk out of the store with their new item. In this case, you’re using immediate payment. But as a freelance writer, you might deliver a blog post to a client then issue an invoice due in 30 days—this is a Net 30 payment terms clause. 

Any time you make a sale or purchase a product or service, there are conditions attached to that deal. And, as an entrepreneur, they can help you collect payment from your customers without feeling bad about it.

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Common payment terminology

Invoices are only as good as the payment terms that come along with them. If you don’t include them, you aren’t clearly communicating what you expect. That means everything from when payment needs to be made to how it’s done and the consequences for non-payment are up in the air.

Terms of saleThe overall payment terms that you and the purchaser have agreed