Payment must be made as soon as an invoice is received—usually by the next business day at the latest. Instead of asking customers to pay within a set period, like 30 days, putting “due upon receipt” tells them you expect payment as soon as possible.
Cash flow worries keep one out of every four business owners up at night. And for good reason—collecting payment from customers can be one of the more stressful business tasks.
Dealing with late payments or even non-payment is a challenge. One way to reduce this risk is by implementing invoice due upon receipt payment terms . By requiring payment when the invoice is received, you help ensure you get paid immediately and avoid the hassle of chasing down outstanding payments.
Let’s look at how and when to use due upon-receipt invoicing and its pros and cons:
As a business owner, you can set the invoice terms and conditions for payments. Whether you’re a solopreneur or someone running a medium-sized business, you should set invoice payment terms that best serve your business.
In general, due upon receipt invoicing is best for new clients or one-time clients. That way, you can wrap things up in one clean transaction. However, having invoices due upon receipt isn’t always recommended. It can cause friction with clients who are also trying to manage their own cash flow. You may want to consider other invoicing terms for clients that will need multiple orders or revisions.
Due upon receipt invoicing terms are good for one-off projects or new clients. It’s not ideal for multi-order projects or multiple invoices.
There are several advantages to using the due upon receipt payment term on your invoices. For example:
Due upon receipt invoicing can help make running your business a smoother process. However, it might not be as advantageous for your clients. Here are some notable disadvantages to consider:
Only you can decide which invoice payment method is best for your business. When selecting your invoice terms, consider relationship management .
Consider your relationship with the client, when deciding whether to use due upon receipt payment terms. Good payment history or rapport means you might want to be more flexible with payment terms to strengthen your relationship.
To maintain great relationships with clients, make sure to word your request for immediate payment appropriately. Use polite but direct language that stipulates payment due date and payment instructions.
Here are some tips on how to write a request for immediate payment:
An invoice requiring immediate payment should not come as a surprise. Clients should understand that payment is due upon receipt before signing the service contract.
Consider using bookkeeping services to help streamline your invoicing and payment collection process
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Start hereInstead of setting your default invoicing payment term to due upon receipt, you could also use other payment terms. For example:
You can also offer incentives for early payment if you choose to use one of these invoicing terms instead. For example, you could offer a 2% discount if the customer pays within 10 days, known as 2/10.
Whichever payment terms you set, make sure to communicate the due date to the client. This makes it more likely that you’ll receive payment promptly. Plus, it helps you contest any disputes that may arise over past-due payments or non-payment.
With QuickBooks, you can set custom payment terms for each client or customer, as well as offer personalized discounts for early payment.
When invoicing, always make sure you have the invoice date and due date clearly labeled. You can also improve your billing process with these best practices:
Need to get paid fast but don’t need an invoice? You use QuickBooks payment links to request payment and let your customers choose a payment method that’s convenient for them.
If you’re having trouble collecting payments from your clients, changing your payment terms and having an invoice due upon receipt may be beneficial. As with any other business decision, weigh the pros and cons of using due upon-receipt payment terms for some or all of your clients.
Having a plan for invoicing can significantly streamline your workflow and reduce outstanding payments. Invoicing software like QuickBooks can help you set up and automate invoices and payments so you can focus more on critical business activities that will help you grow.
Underpaying an invoice on purpose is not considered illegal, but it is a dishonest business practice. Short-paying an invoice can happen by accident, however.
What is a fair late fee for invoices?Late fees for invoices are typically 1% to 2% of the outstanding balance.
What is an example of a sentence for an invoice?A good example of a sentence for an invoice is: Payment is due upon receipt of this invoice.
How do you invoice professionally?To invoice professionally, ensure your invoice includes the following information: Your business name and contact information, the invoice date and number, each product or service, the total amount due, and payment terms, such as the due date.
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