A normal component of all invoices is a section that states the payment terms. Payment terms refer to when the invoice is due and can be any terms a company sets forth. When a business creates invoices for billing, it includes the payment terms somewhere on the invoice. If you are a business owner, you must develop the terms you want to use for your customers. Many businesses offer different payment terms to different customers. To begin, you must choose where to place this information on your invoices.
Decide where to place the payment terms on the invoice. Many invoices are printed from a computer on a standard-size sheet of paper. You can place the terms anywhere on the invoice that you would like; however, many companies choose to place the terms either at the top of the invoice, near the date, or at the bottom, near the invoice total.
Determine what payment terms to use. There are various types of terms commonly used by companies.
Offer net 30 days. A common set of payment terms is requesting payment in 30 days and is written: n/30. This means that the total invoice is due within 30 days of the invoice date. If you prefer to offer a longer terms, any number of days can be chosen including n/60 and n/90. When offering a term of net 30 days, the customer should pay within 30 days, not one month. For example, if an invoice is dated March 10, the invoice is due on or before April 9 because there are 21 days left in March which leaves 9 days left, making the due date April 9.
Use immediate payment terms. There are several terms used that specify that the payment is due immediately. Due on receipt is very common, but may be stated in other words, including Upon Receipt, Payable Upon Receipt, or Cash on Delivery. These payment terms inform the customer that the payment is due immediately after receiving the goods.
Choose end of month payment terms. This payment term states that the invoice amount is due in full by the last day of the month according to the invoice date. It is written by stating: Payment Terms: EOM.
Offer a discount. Some companies give credit for a specific number of days, commonly 30, but offer a small discount if the customer pays the bill in a shorter amount of time, such as 10 days. To write this type of payment term on an invoice, choose a discount amount and the number of days. If you give your customers 30 days to but the bill in full, but you choose to give a two percent discount if paid within 10 days, include the payment terms by writing 2/10 n/30.