The Best Invoice Payment Terms to Get Paid Fast

I previously had requested a method of providing discounts for faster payment. I still think this is the optimal route to get paid faster.

It would be nice if a set of terms could be pre-defined to allow for such things. The invoice would be shown at full price with a discount schedule below.

In business, this used to be fairly common to offer a discount for fast payment. IE: 2/10, net 30 is a 2% discount if paid in 10 days, and net due within 30 days.

I would suggest taking it a step further to allow for multiple discounts: 10/5, 5/15, net 30.

in response to Casey’s suggestion of discounts for prompt payment: it’s excellent in theory, but one should be wary that you open yourself up to ‘interpretation’ by the client of how early they are paying. I have experienced — as have others I know — clients who do NOT pay within the early timeframe but still treat themselves to the lovely discount. They figure (usually correctly) that I’m not going to re-invoice for that extra 2% they shorted me. And the bigger the client, the more you can count on it happening! designer beware, haha!

Is there a way to automatically add late fees to late invoices in Freshbooks?

This will seem like an elementary question, but your feedback would be appreciated! A senior assoicate in my dept. has convinced our Controller that invoice due dates should never be changed or extended. She claims that by changing the due date you are changing A/R history and this would be a violation for our auditors. If the situation warrants a change in due date and we document in writing why the change was made isn’t this acceptable? Thanks!

I recently started offering discounts (5%) for payments within 5 business days as an experiment. Of the invoices I offered the discount to, all paid by day 5. Of the invoices not offered the discount, they paid in approximately 20 days, with some holding out until day 30. While I was sure to point out the option to the client to receive an additional discount, they had to contact me to have the discount applied since there is no feature to do so at present.

I also have a hefty 10% late payment fee (not interest) applied to invoices if not paid. I am sometimes lenient on that fee if the client contacts me, but it has proven to work as well.

I still think it would be great to be able to set the terms to apply discounts or penalties.

I am relatively new to freelancing as a graphic and web designer. I appreciate forums like this where I can hopefully learn from others experience. Cheers!

Thanks for sharing the research, results, and nuances of your research. I like the idea of including a specific due date in the payment language (helps avoid misunderstandings and aids the calendar-challenged).

One comment: The date format “XX/XX/XXXX” is clear to most native English speakers/readers, but international date formats vary. A more formal expression (i.e., January 11, 2011) would avoid any confusion.

I can relate to Jayne Bigsby’s comment (Sept 3 2010) … we too have a 10% Late Payment Fee and it is only when receiving a Statement with the LPF applied that the customer calls to query the ‘extra’ amount requested. We have the option to waive the LPF when applying the payment (and usually do so if the customer calls) and have found that it sometimes does not matter how many times you call them to discuss the payment, it is the Statement with the LPF applied that prompts them to pay. Interestingly we often receive the payment of the original invoice amount a very short time after Statements are sent.

Great information and tips here! I’ll be using these for my future clients. Thanks for sharing.

Thanks for the info. Very helpful!

I’m so glad to have found this. I am a freelance writer and over the past year, I’ve had several of my clients ignore my invoices despite the “Due Upon Receipt” note at the bottom. When I call them 30 days later, I’m frequently told, “When the client pays us, we’ll pay you.” That stinks. I can’t use that same line at the grocery store or with my electric company. I’m trying out the new language today and hoping it will be a success!

Just an FYI, you can’t charge “interest” unless you provide the customer with a “truth in lending statement”
You can charge/apply reasonable late and or service fees. Each state has usury limits (check with your Secretary of State’s website) but small claims court will usually allow $15-25 a month or up to 1.5% of the monthly balance unless otherwise posted on invoices.

Good article and thanks. I’m a writer who invoices AND I make my living advising big companies about tone of voice and speaking to customers. (one of the companies that now uses my words in their own invoices and letters is a multi billion dollar bank). Anyway, I never found a need to put payment terms on my invoices but thought recently it would help. This is the phrase I’ve decided to use and would recommend to any of the companies I deal with.

“Payment seven days or earlier, thank you.”

It’s clear and politely firm.

By the way, charging interest is a bit of a turn off. Leaves a bad taste in the reader’s mouth. Remember, you do *like* your clients, and want them to continue to *like* you, don’t you?

Almost all of the get paid faster articles out there are missing some major points. Never reduce your fee to get paid on time, unless you raise it to offset it!

As someone who has made 360,000 collection calls, and recovered 20MM in past due payments, I have a REAL grasp on what it takes to maximize revenue.

You can follow us @getpaidfaster or read my blog on our website.

Thanks and good luck everyone.

This post helps out a lot! Thanks so much!

Just had a hassle getting paid by an advertising agency client. They say they have to have sign-off by two directors, and this can take up to one week. They also say they have to wait until their clients pay them before I can be paid. And even then, they send a cheque by second-class post.