Chasing clients can be one of the biggest pains of solopreneurs and freelancers. Not only does it take up a significant chunk of time, but it also impacts your performance in the long run.
Having clear payment terms and knowing when your clients will pay you can lift a huge burden off your shoulders. But, what are the different kinds of invoices you can send, and when should you expect payment for invoices?
You have a choice to send a due upon receipt invoice or net due invoice. Luckily online invoicing software lets you generate customized invoices online and stay on top of your finances.
So, you must make it a point to let your clients know payment deadlines. Also, clients who pay promptly are worth keeping for the long run. Before we move on to understand why clients delay payments and how you can prepare them to pay you faster, let us know more about due upon receipt and net due invoice.
Due Upon Receipt
As the name suggests, these invoices are meant to be paid as soon as your clients receive them. These are ideal for small projects and customers who can pay within 24 hours.
But, before making these invoices from your online invoicing software, make sure you offer multiple payment options to your client. Direct transfer, PayPal, Stripe, check payments, and credit card payments are some options you can offer. With immediate payments, you will no longer need to be paid for work that you did a month or maybe months ago.
However, there are some advantages and disadvantages of due upon receipt invoice. The major drawback being that these invoices can come as a surprise to your client. Moreover, it is also possible that your client doesn’t have enough funds to pay you at that time. Besides, some clients may not understand the invoice completely and take it as an excuse to delay payments.
But, don’t worry, you can keep all management hassles at bay by using online invoicing software. You even use it to send automated payment reminders.
A net due invoice specifies when you expect the payment to be made and the number of days a client has to deposit the payment.
For instance, an invoice that mentions $10,000 net 20, means that you are expecting the payment within 20 days of completing the project. Typically, a net due invoice is due within 10-30 days.
The main benefit of these invoices is that your clients get ample time and are left with little to no excuses for late payments. Moreover, if you send out your invoice too early, your client may forget to pay it. So, you will need to send a reminder close to your due date to get paid.
You can also choose to give discounts and incentives for early payments. Similarly, you can also add late fees to invoices and motivate your clients to pay you faster.
How to Prepare Your Clients to Pay Promptly?
The best way to ensure prompt payments is to set clear terms from the start. When you are dealing with clients, make sure you discuss the payment terms. The idea is not to be forceful but to ask them if making payments within 10-14 days is fine for your client or not.
Other ways include asking for an advance payment. This will be good for your cash flow and also give you an idea about how prompt the client will be at paying your invoices. If your client delays making an advance payment, you must reconsider taking the project or not.
One thing which you should do without fail is prepared a contract. This will make it easier to approach legal authorities if things go awry. Clients who plan to pay you will sign the contract happily. You must make it a point to get legal advice and then prepare a contract.
This was all about the advantages and disadvantages of due upon receipt invoice and net due invoice. You can easily customize them to build better relations with clients and streamline your finances.
Are you still struggling to find the right online invoicing software? Then, allow us to find you!