6 Easy Tips on How to Create and Use Invoice Payment Terms


If you have used and installed any program on a computer, you know the great casual lie that we all have done. You have read, understand, and agree to the service terms and conditions as written. No one actually does that! It is a giant wall of text that is often written in legal jargon, that is interrupting your intense need to play solitaire.

We carry this idea when dealing with payment terms. When it comes to payment terms, we think it is a complicated mess and oftentimes do not want to deal with it. The good news is Sprout Invoices doesn’t make it that complicated. In fact, it’s fairly simple! Payment terms are simply the rules that define the relationship expected between yourself and the customer. Invoice payment terms and conditions have never been easier and if you are interested in how payment terms work within Sprout Invoices, check out our documentation video below:

Here are some tips to consider when establishing payment terms:

1. Be Upfront.

Before entering into an agreement, it is vital to make sure your customer understands what your payment terms are. This includes how much your services cost, what to expect when you expect a payment, and what is done with unexpected extra costs. Depending on the kind of service, you can pass this information along in a couple of different ways. For a regular routine service or sale, a simple line of text or notice on your WordPress site will work perfectly. For more personalized, or commissioned work, this should be a standard conversation in whatever way you establish your contracts.

2. Be Flexible.

While you do want to have a set of payment terms, you should keep your payment terms somewhat forgiving. Clients will want to pay you, but they may be a day or two later than what you prefer. What this means is to give your client a range of weeks to make the payment. The initial bill, and then a couple of reminders after, often do the trick. The goal with your payment terms should be to make it clear how your client should pay, and not put them in a trap where they owe more money. Placing late fees is a completely acceptable way to ensure payments in a timely fashion, but when it comes time to collect those late fees some clients will not be happy, and it will be difficult to enforce. Weaving the payment terms into an automated process can make the situation easier to defuse.

3. Make Clear Payment Methods.

Accepting payments from your client is an important task, and if you don’t have a clear and concise way for them to pay, they may not be able to at all. Most businesses have a couple of fairly clear ways for them to accept payments, particularly online. Usually, a form of credit card or debit is an expected way for a person to pay. However, you should make it clear to your customers before entering into an agreement on how they can pay. Sprout Invoices offers a wide variety of billing support and payment gateways, that can easily be done within the initial invoice.

4. Send Timely Reminders.

Keep in mind that your clients are often busy and their payments aren’t always on their minds. Balancing reminders can be tricky, and it may be something that you describe in an agreement initially. Sprout Invoices does an excellent job in that you can automate reminders to a client, or choose to send them manually. I would suggest a reminder a few days before warning the late fees will start to accumulate. Sending too many reminders to a client can come off as pushy or even cause them to not want to do business with you in the future. To prevent myself from becoming too engrossed and concerned, I allow Sprout Invoices to handle reminders, as opposed to me sending them manually.

5. The Invoice.

Once you have set the payment terms and met your end of the bargain, do not forget to send the invoice. Sprout Invoices allows you to combine all of this into a neat singular package. From the invoicing generator, you can create standard payment terms that apply to all invoices, or you can create customized payment terms on individual invoices. You can stipulate how late fees are designed: is it a flat rate, or is it a percentage off of the initial bill? You also can make clear how much payment is required to avoid a late fee. Sprout Invoices allows your late fees and payment terms to operate through the invoice, which means the invoice will reflect your payment terms as it is appropriate (assuming you choose to include them on the invoice). Standard invoice payment terms can be confusing but Sprout Invoices have simple and effective tools to tackle them.

6. Always Follow through.

This is the part of payment terms that no one hopes to get to. What do you do if a payment agreement is violated?

  • After reminders have failed, remain calm and consider your needs and the clients. Try to talk to them about what is going on, and see if there is another way to resolve it. Avoid intimidation or threats.
  • If the client is evading payments, decide if you wish to continue into legal action. This comes down to what you think is best.
  • If it has come to legal action, contact a lawyer and ask them to write a letter of demand. This can be done by yourself, but it may be wise to consult a lawyer.
  • If at this point you have not received payment you will need to either: let it go, contact a collection agency, or take it to court. Each of these come with a different cost. Letting it go yields no money. Contacting a collection agency or court system will turn the relationship with the customer sour, and you will not get much of the money at all. At that point, you may choose to not engage.

Altogether, payment terms are designed with you and your client’s best interest in mind. Payment terms help define the expectations between you and the client, and can help foster a healthy partnership. Sprout Invoices has solid tools and methods to help you define and enforce these payment terms. It is our belief that a smooth system of invoicing, backed by these payment terms, will help you get paid on time!