30, 60, 90 Invoicing Payment terms you need for your business
Updated: Jul 6, 2021
In any business, whether you’re just starting up or have already reached the scaling phase, it is necessary to have a smooth-running cash flow from your customers and clients to cover your operating costs, such as staff and workers’ compensation and utilities. With that said, invoicing is very needed to your business because without these bills, you won’t be paid for the services rendered or products sold, which in turn means you'll not be able to handle all your expenses and it will create inefficiency in the operation of your business.
Although your invoice will only be used as what you’ve stated in “payment terms and conditions”. It is very important to clearly communicate when the payment is going to reflect on your bank account, as well as your preferred payment method, incentives for early payments, and penalties of late payments.
In addition, payment terms will be used to help your company receive payments on a regular schedule. If you have this predictable payment schedule, it will be easier to create a budget and prevent any cash flow dilemma.
For instance, the success of your business may solely rely on the invoice payment terms that you create when sending out to your customer.
1. Terms of Sale
These are the essential parts of any invoice in which you and the customer have agreed upon such as amount, cost of delivery, payment method, and the deadline of the payment.
This is very crucial between the buyer and seller to have this made clearly to prevent any misunderstandings in the future as they become aware of their responsibilities from the beginning.
Terms of sale are significant in worldwide trade as it covers the shipping history, who is liable for international taxes, and any other circumstances that have been implemented by the international chamber of commerce regulations.
2. Payment in Advance
Payment in advance or PIA. It is the payment that is made ahead of the billing cycle. It’s very common for business owners to ask for an advance payment for their products or services. For example, a building contractor may require a 50% down payment before starting a project. Advances protect sellers from non-payment incidents that may happen in the future and to cover any materials they require to carry out the project.
3. Immediate Payment
This is Cash on Delivery” (COD) basis. It means that a payment needs to be done at the time of the delivery. If the buyer doesn’t make the payment right away — whether by credit card or online service payment — the seller has the right to redeem the goods.
Although this term is helpful for business owners since it makes the payment available immediately, some clients and customers don’t want this term as they are afraid that they won’t have enough cash to pay the bills. 4. Net 30, 60, 90
This means that the net payment is due in either 30, 60, or 90 days after the invoice date. For example, if the invoice was dated September 10 and you used one of the most used payment terms, net 30, then the payment would be expected before September 9.
Sometimes this term can be confusing to both seller and clients, it’s suggested that you use a term that is clearer, such as, “Days” instead of “Net.” Conclusion
When laying out your terms of payment, remember to be clear, specific, and consistent. Offer a variety of payment methods to your clients. You can also partner with SALS CAPITAL, they can help you with invoices that need fast funding which is easier to get approved for compared to other similar options. You may visit their website or call (332-334-1077) to get the approval you need today.