For your small business, having solid terms and conditions for your invoicing is critical. If your invoices are difficult to read or understand, you may be causing serious damage to your cash flow. Why? Mostly because if your client doesn't understand your invoice, they won't pay it. Your client needs to know that the items or services they've requested are being priced appropriately.
1. Begin to consider all possible legal issues and scenarios.
The first thing you should do before putting down your terms and conditions is to make a list of all potential legal barriers or scenarios.
Consider the following scenario:
If the client does not pay the invoice, what steps will you take?
What happens if you don't deliver your services, products, or service to the consumer on time?
What will you do if a customer is unhappy with your products or services?
What happens if a product or service delivered by your client's delivery service is damaged?
Are there any discounts for consumers that pay in advance?
What sort of interest rate would you prefer to levy on late payments?
What if the client wants to revise the contract right after the terms and conditions have been agreed upon by both parties?
Is it possible for your customer to get a refund? What scenarios, if any, would allow for this?
What happens if the scope of the project expands?
Who is going to pay for a budget or quote that was overestimated?
Who is liable if a product fails after it has been purchased?
What technique will you employ if the contract or agreement is terminated?
It may take some time to consider and develop this list, but after you've done so, you'll be able to quickly write future conditions and terms with the other clients you'll add to your client list. Most importantly, having the best terms and conditions for your company will ensure that you are rewarded and that your company is taken care of if legal action is ever taken.
2. INCLUDE ALL ESSENTIAL ELEMENTS OF AN INVOICE.
Including all of the essential aspects of an invoice will not only speed up the payment process, but it will also address any questions the client may have about the items or services you delivered.
When creating invoices, be sure you include the following information:
Your company's logo
Number of the invoice
Details of your contact information
Contact details for your client
The deadline has passed.
The costs of the items or services you offered
You accept a variety of payment methods.
Discounts for early payment of invoices or the imposition of late penalties
Check that all of the information on the invoice is valid and that it is being sent to the correct individual before sending it out. Any mistakes can cause the payment process to slow down and make you appear less professional.
3. EXPLAIN THE PRODUCTS/SERVICES PROVIDED OR THE PROJECT'S SCOPE IN DETAIL.
This is unquestionably the most important portion of your invoice's terms and conditions. Why? Because it specifies exactly what the client is paying you for.
For example, if you are hired to create a website for a customer and it costs more than the client anticipated, having a breakdown of the time and expenses it took you to complete the task answers any queries or doubts the client may have about the final invoice amount.
4. REDUCE THE DURATION OF YOUR PAYMENT TERMS
This should be self-evident, but the longer you give customers to make a payment, the longer it takes for you to get paid, resulting in a slower cash flow.
So, if a customer has 45 days to pay an invoice and pays you a couple of weeks late, it implies you've waited two months for payment.
When it comes to invoicing, a payment period of 30 days or fewer is the norm simply because it helps keep the cash flowing. Regardless, research your industry's invoicing standards and inquire about the client's pay period. These elements can assist you in determining your payment terms.
GUARANTEES AND WARRANTIES SHOULD BE HIGHLIGHTED.
It is not uncommon for a company that sells goods and services to provide numerous assurances and warranties. It gives the customer assurance and makes them appear more legitimate and reputable. If you offer a guarantee or warranty, make sure it's stated clearly in your terms and conditions.
Never forget to handle issues such as the loss of a client's or customer's guarantee or warranty.
6. GO AFTER OVERDUE PAYMENTS.
Customers will, on occasion, fail to pay their invoices by the due date. Rather than being passive, you must be proactive in chasing down those late payments.
Keep track of your clients' payment due dates and contact them via phone, e-mail, or letter if they have not paid you by the due date. Include late-fee terms on your invoices, such as collecting interest on past-due payments, which a reliable cloud-based invoicing software will accomplish automatically.
You may have to write a collection letter, employ a collection agency, or take the late-paying client to court if you can't reach them or they don't respond to follow-ups. Make sure that all of this information is absolutely obvious from the start.
7. ONE SIZE DOESN'T FIT EVERYONE.
Make certain that your terms are tailored to your company. Remember that your company does not have the same requirements, resources, or clients as other companies. As a result, you can't just copy and paste the terms and conditions from a commonly used template or another company because they won't likely suit your specific demands.
A template can help you get started and point you in the right direction, but you must eventually design terms and conditions that are tailored to your business and customers.
8. BE PROFESSIONAL AND POLITE AT ALL TIMES.
Being courteous can have a positive impact on your business. Simply using a sentence like "please pay your invoice within twenty-one days" or "thank you for your business" can boost the number of invoices paid by more than 5%! This may not seem like much, but it can add up to thousands of dollars in your bank account each year.
Being professional and friendly can easily improve your brand's image, in addition to assisting you in being paid faster.
9. LEAVE THE TERMS AND CONDITIONS AS SIMPLE AS POSSIBLE TO READ.
Maintain a simple and intuitive language in your conditions and terms. Put yourself in your clients' consumers' shoes, and you'll see that they aren't all familiar with business jargon or even bookkeeping words like "net 30."
Furthermore, don't try to cram everything onto one page by choosing a small font so that your customers can't see the fine print. It will appear shady to your client, and it will damage your reputation (regardless if there is anything tricky on your invoice).
10. ASK FOR HELP WHEN IN DOUBT.
When everything else fails, or you find yourself in a complex or specialized scenario, don't be afraid to seek advice from your mentor, fellow business managers, or your attorney. These are people who have written terms and conditions before and are more knowledgeable about laws and regulations than you are.
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