Simplify Your Workflow with Our Invoice Payment Terms Template for Engineering

Invoice payment terms template for Engineering

today we're going to dive into how to establish effective payment terms to financially protect your business hey my name is morgan law and i'm from fine point stop biz and my goal is to help business owners and bookkeepers better manage their finances today i am partnering with quickbooks on a video series to help business owners better run their business [Music] as a self-employed freelancer or small business owner you know how crucial it is to get paid on time so today we're going to talk about some common payment terms we're going to say what they are and how to use them before we get any farther i'd love it if you give this video a thumbs up as well as subscribe to quickbooks youtube channel down below if you're more of a reader there's also going to be an article linked in the description box payment terms are an agreement that sets expectations for how and when you're going to get paid and it also includes penalties for a missed payment having those clear payment terms really helps your customers pay on time and it also makes the process a lot easier for them the components of payment terms typically include number one invoice date number two the total payment amount due number three the payment date and the period of time the client has to pay it number four stipulations for an advance or deposit number five payment plan details and number six a list of accepted payment methods i also recommend putting an invoice number on your invoice that just helps you organize them chronologically and then don't forget to include contact information on there too so clients know how to get in touch with you payment terms are essential when negotiating a contract this really helps maximize how quickly the invoice is paid and minimizes inconvenience always include payment terms on your invoice but make sure you discuss them with the client first here are some examples of payment terms prepayment using these terms customers pay you in advance this reduces the risk of losing money and improves cash flow but depending on the type of your business not all customers may be comfortable paying upfront so you also might want to consider a partial payment 50 upfront so this is when the customer pays you half of it before you start this is great for customers because their payments are smaller than but just make sure you define when the other 50 is gonna be due installment agreements so this is when the total cost is broken up into smaller installments and this can be done in time so maybe every three months you get another installment from your client or it can be done when you complete certain parts of the project immediate payment or payment upon receipt so this just means that you get paid as soon as the goods or services are delivered and you can even negotiate within the contract that if you don't get paid right away you can repossess the goods net 7 10 15 30 60 or 90. these terms refer to the number of days that you have to pay the invoice so for example net 30 just means that it has to be paid within 30 days of the invoice date subscriptions and retainers so this has your client paying a regular reoccurring amount for a set period of time such as monthly or annually automating invoicing for recurring payments really helps you save time on collecting those payments early payments so you can choose to offer a discount if customers pay you early and this is a win-win because customers get that discount and you get your cash sooner here are some tips to help create effective payment terms number one define the payment terms in a contract so you and the client should work together to come up with payment terms that work for both of you do that before the work begins and then make sure you put that in writing in a contract the contract is also a great place to outline any late fees that will be imposed for past due invoices number two invoice promptly for on-time payments so as soon as the work is completed make sure to invoice your customer right away this is going to avoid late payments and also help your business with cash flow putting together a concise easy to understand invoice is going to go a long way in making sure that they're paid on time the right tools can help cash keep flowing into your business as a bookkeeper i use quickbooks to send and track invoices to accept payments and to automate follow-up reminders i do this both for my business and my clients businesses quickbooks makes it super easy and i've been using it for about eight years leave me a comment down below about one thing that you learned today and if you enjoyed this video definitely give it a thumbs up and subscribe to quickbooks youtube channel down below hit the red button thank you so much for watching [Music] you