Online Invoicing and Payments: Managing Outstanding Invoices

Smart online invoicing with built-in payment processing

ACH bank transfers

Save time with ACH bank transfers—no more paper checks, transaction fees, or hectic bank runs.
Smart invoicing

Accept payment right in the online invoice. Customers can pay by credit cards, debit cards, and ACH bank transfers.
Make it easy to get paid

Send invoices that customers can pay anywhere, anytime—even track and manage multiple currencies.

How to create an invoice in QuickBooks (2:30)

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Low, flat rates. No monthly or setup fees.

Get QuickBooks Payments

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Charge more than $7,500 per month?
Save up to 40% – call 1-866-827-9500.

Low, flat rates. No monthly or setup fees.

Get QuickBooks Payments

See how our rates compare

Charge more than $7,500 per month?
Save up to 40% – call 1-866-827-9500.

Low, flat rates. No monthly or setup fees.

Get QuickBooks Payments

See how our rates compare

Charge more than $7,500 per month?
Save up to 40% – call 1-866-827-9500.

Send professional, custom invoices

Create custom invoices

Select a template, then add your logo and colors to make it your own.

Specify job details

Add discounts and upfront deposit, include SKUs, service rates, and more.

Add billable hours

Automatically add billable hours to invoices using Google Calendar, TSheets, or QuickBooks time tracking.

Send professional, custom invoices

Create custom invoices

Select a template, then add your logo and colors to make it your own.

Specify job details

Add discounts and upfront deposit, include SKUs, service rates, and more.

Add billable hours

Automatically add billable hours to invoices using Google Calendar, TSheets, or QuickBooks time tracking.

Send professional, custom invoices

Create custom invoices

Select a template, then add your logo and colors to make it your own.

Specify job details

Add discounts and upfront deposit, include SKUs, service rates, and more.

Add billable hours

Automatically add billable hours to invoices using Google Calendar, TSheets, or QuickBooks time tracking.

Accept payments in QuickBooks and get paid 2x faster¹

Receive instant notifications

Get real-time alerts when customers view and pay invoices. Automated reminders let customers know payment is due

Receive instant notifications

Get real-time alerts when customers view and pay invoices. Automated reminders let customers know payment is due

Automatic matching

QuickBooks matches payments with invoices so your books are reconciled automatically.

Automatically match payments with invoices

Automatic matching

QuickBooks matches payments with invoices so your books are reconciled automatically.

Smart payment tools

All payments you accept online or on the go appear directly in QuickBooks, so you don’t miss a thing.

All invoice payments accepted appear in QuickBooks

Smart payment tools

All payments you accept online or on the go appear directly in QuickBooks, so you don’t miss a thing.

Accelerated invoicing

Create invoices 20% faster ²

Create and send multiple invoices to your clients. Skip the repetitive, manual tasks with the ability to upload a file and import hundreds of invoices on the go.

Get time back in your day

Save time and effort manually entering data for multiple invoices. With accelerated invoicing, you can easily duplicate similar invoices for multiple customers.

Send multiple invoices with accelerated invoicing

Accelerated invoicing

Create invoices 20% faster ²

Create and send multiple invoices to your clients. Skip the repetitive, manual tasks with the ability to upload a file and import hundreds of invoices on the go.

Get time back in your day

Save time and effort manually entering data for multiple invoices. With accelerated invoicing, you can easily duplicate similar invoices for multiple customers.

Payment comes so quickly. I don’t have a single client that’s over 30 days. It’s a lot easier to pay an invoice when you’re pushing a button on your computer.

Jeff Lewis, Fluis Inc.

Payment comes so quickly. I don’t have a single client that’s over 30 days. It’s a lot easier to pay an invoice when you’re pushing a button on your computer.

Jeff Lewis, Fluis Inc.

Build customer trust and grow your business

The complete guide to creating invoices & getting paid

By Madeleine Somerville June 25, 2020

Whether a freelancer, consultant, or entrepreneur, invoicing is a key component of your business. But what is the easiest and more cost-effective way to create invoices? This guide covers everything you’ll need to craft professional invoices:

How to create invoices
Payment terms on invoices
Do I need a payment contract?
Should I require a deposit?
How to accept invoice payments
Tracking invoices
Sending friendly reminders
The cost of getting paid
When clients don’t pay

How to create invoices

Professional invoices build a cohesive look for your business and brand, as well as highlight the value of the work you’re providing. QuickBooks streamlines the process with automatic prompts to help you fill in the required information. Here are the essential elements you should include in each invoice:

1. Company information

List your contact information and your customers’ details—legal name, business address, phone and fax number (if applicable)—near the top or bottom of the invoice.

2. Header

Include the title, “Invoice,” at the top of your document so customers can immediately identify the communication.

3. Date, invoice number, and unique identifier

Include the invoice issuing date, as well as an invoice number or other unique identifier. This can be a simple file number, unique billing code, or date-based purchase order number.

4. Customer purchase order (PO) numbers or billing codes

Ask your customer about any unique details to include, such as an internal PO number or billing code. For many larger companies, these identifiers are necessary to keep track of payments.

5. Itemized list of goods and services

Your customer—and potentially, an auditor—should understand what goods and services you’ve provided with just a brief scan of the invoice. Include names, dates, rates, the quantity of the goods and services provided, as well as any price modifications, item descriptions, and your work processes.

6. Payment terms

Include a due date and be aware that standard payment terms vary by industry, business, and client relations. Clarify that penalties—late fees or a percentage of the total bill—will be imposed if these terms are not met.

7. Itemized fees

List taxes, handling fees, or other charges, on separate lines. This is important for varying budgets and balancing your internal bookkeeping.

8. Total amount due

Make sure your total amount due is clear and easy to find.

9. Instructions for paying

Provide a clear set of payment steps specifying how you accept payments: online, wire transfer, check, or credit card. The more options you provide, the faster you’ll get paid.

Payment terms on invoices

It’s important to include payment terms and conditions in order to clearly communicate when payment is expected and how customers can pay the invoice.

Invoice Payment Term	What It Means
Terms of sale	The terms agreed upon by the buyer and seller, such as cost, amount, delivery/shipping, taxes, payment method and payment due date.
PIA	Payment in advance. This lets the customer know that the full payment is expected in advance, before starting work.
CIA	Cash in advance. This lets the customer know when you expect the payment (in advance) and how you will accept the payment (in cash).
Immediate payment	This lets the customer know that the payment is expected at the same time as the product/service is delivered, or the seller has the right to repossess the product/service.
Upon receipt	This tells the customer you expect payment as soon as the customer receives your invoice.
Net 7	Payment is due 7 days after the invoice date.
Net 10	Payment is due 10 days after the invoice date.
Net 21	Payment is due 21 days after the invoice date.
Net 30	Payment is due 30 days after the invoice date.
Net 60	Payment is due 60 days after the invoice date.
Net 90	Payment is due 90 days after the invoice date.
Net EOM	Payment is due at the end of the month in which the invoice is received.
15 MFI	MFI stands for Month Following Invoice. 15 MFI means payment is due on the 15th of the month following the invoice date.
2/10 Net 30	Net 30 means payment is due within 30 days of the invoice date. 2/10 Net 30 means if the customer makes the payment within 10 days, they will receive a 2% discount.
50 Percent upfront	The customer must pay 50% of the total invoice amount before any work begins.
Line of credit pay	This gives the customer the option to settle their invoice over a period of time by purchasing the product/service on credit.
Quotes & estimates	These are the proposed prices for your products/services.
Recurring invoice	Recurring invoices are used for ongoing services, typically with monthly or quarterly payments.
Interest invoice	An interest invoice outlines the fees associated with the interest charged based on a past due payment.
Invoice factoring	Invoice factoring means you sell your unpaid invoices to a third party (an invoice factoring company) that will purchase the invoices from you for a percentage of their total value and take responsibility for collecting the invoice payments, giving you immediate cash on hand.
Cash account	Payment on a cash account is collected via cash only–no credit.
Letter of credit	This is documented credit confirmed by a bank/financial institution.
Bill of exchange	This is a promise from the customer to pay at a later date, typically supported by a bank/financial institution.
COD	Cash on delivery. This means payment is expected at the same time as the delivery of the product/service
CND	Cash next delivery. This is used for recurring services, meaning the current delivery of the product/service must be paid for before the next delivery date.
CBS	Cash before shipment. Payment is expected before the product is shipped
CWO	Cash with order. Payment is expected at the time the order is placed.
1MD	Monthly credit payment of a full month’s supply of goods/services.
2MD	Monthly credit payment of a full month’s supply of goods/services, plus an extra calendar month.
Contra	The customer’s payment is offset against the value of supplies purchased from the customer.
Stage payment	Payment made on an agreed amount at that stage (of installments).

Do I need a payment contract?

A payment contract can clarify and solidify a customer’s expectations. You should discuss and come to an agreement on important terms, including:

How you charge
The range of services you will provide
Your payment terms
If you charge deposits

Outline parameters for late payments. For example, 10% of the payment late fee for each 10 days a payment is overdue. Go over the contract details with your client before beginning work. Spending five minutes drafting an invoice can avoid costly misunderstandings in the future.

Should I require a deposit?

A deposit of between 30-50% can protect you if client troubles arise. Outline the parameters in your contract, make sure your clients are aware of your policy, and issue an invoice for the deposit amount. When the job is completed, issue a second invoice deducting the deposit amount from the total owed.

How to accept invoice payments

Cash

Cash transactions have no fees, but they cannot be tracked. It is also difficult to securely transfer large sums of money, so cash transactions are rare.

Check

Use a standard checking account as there usually are no transaction fees. However, checks require that you manually update your books and your invoice tracking system.

Automated Clearing House (ACH)

An ACH transaction transfers funds from your customer’s bank account to yours electronically. ACH transfers are fast and secure. Your customers will need to supply their transit and account numbers.

Credit and debit cards

QuickBooks users can accept both credit and debit cards. Transaction fees vary slightly based on the payment platform, but typically range from between 2.4–3.4%.

Do you accept a lot of payments in person? With products like Square and the QuickBooks mobile card reader, you can take credit and debit card payments on the spot. And if you deal in online transactions, PayPal is a great option (and typically has fees of 2.9%). Plus, all integrate seamlessly with QuickBooks software.

BitCoin

Less common than traditional payments, crypto currency transfers are simple for QuickBooks customers—just turn on your PayByCoin feature.

Tracking invoices

If you’re creating your invoices in Word or Excel requires meticulous organization, can leave you open to information loss, and error. QuickBooks’ features take the guesswork out of invoice tracking:

Automatically generated invoice numbers
Sorting invoices by client name
Providing a clear balance sheet of sent invoices
Identifying past due invoices

QuickBooks also offers a Pay Now button on the invoice itself, which can help you get paid 2x faster.¹

Sending Payment Reminders

Payment requirements are typically set at 30, 45, or 60 days. But a month is a long time and a payment due date may be forgotten. With the payment reminders feature built into QuickBooks, you’ll get the prompts, reminders, and organization you need to make sure invoices don’t fall through the cracks.

Here are a few examples for how to write a payment reminder message for your customers/clients. You can customize them to fit your specific needs and match the relationships with your customers.

Day 15 – Polite reminder email example

“This is a friendly reminder that payment for invoice #0036, in the amount of $1,500 will be due on September 12, 2017. Prompt payment is very much appreciated—please let me know if you have any questions.”

Day 30 – Late payment email example

“This is a friendly reminder that I have not yet received payment for Invoice #0036 in the amount of $1500, due September 12, 2017. Please let me know if you have any questions.”

Day +30 – You may want to call them

Once an invoice is more than 30 days late, picking up the phone and giving them a call is a great way to go. It’s best to assume honest oversight over intentional malice, but it’s ok to let them know that quick payment is appreciated.

The cost of getting paid

With so many payment methods and fees, it’s tempting to stick to good old-fashioned cash and check. But other forms of payment can attract more customers and even get paid up to two times faster. But, is it worth it?

Cost vs. loss comparison

Sam’s latest client, Ms. Ramirez wants to buy a 3,600 square foot house and needs it inspected and tested for radon. After completing the inspection, Sam issues her an invoice for $1,000 (his fixed rate of $0.25 per square foot x 3,600 square feet = $900, plus $100 for radon testing).

Here’s a chart of how much of that $1,000 Sam will end up keeping depending on which type of payment he accepts:

So, is it worth 2-3% of each invoice to offer your clients more payment options, avoid the hassle of depositing checks and manually tracking cash, and get paid up to two weeks sooner? For many business owners, the answer is yes.

When clients don’t pay

Hopefully, you won’t encounter this too often. Since you have a payment contract in place with your client, refer them to the contract parameters. You’ve established a 10% late fee for each 10 days a payment is overdue.

Using invoice factoring is also effective. This is a process whereby a third party buys your invoice debt, typically giving you between 70-90% of its value. When your invoice gets paid, you receive the remaining 10-30% of the invoice, minus the company’s processing fee.

Invoicing is a breeze once you’ve mastered the basics—and with QuickBooks, a well-made invoice personalized for your precise business needs is easily accessible.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Six ways to get your invoices paid on time

By Carrie Smith March 21, 2019

Having trouble getting invoices paid? You’re not alone. Check out these 6 ways to keep the incoming revenue wheels greased, making sure you get paid as quickly as possible.

1. Accept all forms of payment

The easier it is for your customers to pay, the more likely they are to pay on time.

Checks

Paper checks may seem like a thing of the past, but there are still a valid payment widely in use. And after all, there’s no harm in embracing all your clients’ preferred methods of pay. Make sure you clearly list your company’s name and mailing address or PO box on your invoices so clients know exactly where to send checks.

Credit and debit cards

Credit and debit cards are easy to use and help you get paid on time. Some of the best and most popular merchant credit card processing services include:

QuickBooks Payments
Send email invoices with a Pay Now Button, and make it easy for your customers to pay directly within the invoice. Same rates for all major credit cards (2.9% + $.25 for an invoice paid online).
Square
You can process credit or debit cards in person or digitally. Plus, you can auto-import sales and expenses in QuickBooks using the Sync with Square app.

ACH bank transfers

ACH bank transfers are often the cheapest and easiest way to move money. This is especially helpful for repeat customers. Just setup the account and routing numbers once, then collect 100% of the money you’re owed.

PayPal

It only takes a few minutes to receive PayPal payments. The receiver—i.e. the invoicer—is responsible for the fee of $.30, plus 2.9% on every transaction. These fees can be deducted as a business expense.

Mobile pay

Mobile pay is fast becoming one of the most prevalent payment methods around. These are some of the most popular apps that sync with other payment processing services:

Samsung Pay
Apple Pay
Google Pay
Venmo Share Payments
Facebook Messenger Payments

Be flexible, look for options that keep your bookkeeping straightforward and don’t forget to write off the transaction fees associated with digital payments.

2. Create clear invoices

Your revenue relies on getting your invoices paid. It’s worth investing time in making them as clear as possible. Here is a brief checklist of invoice necessities and an example of a thorough and easy to understand invoice:

Make the total and due date clear
Itemize goods and services
Send it to the correct person
Track and simplify with identifiers

3. Be timely

The quicker you send an invoice, the faster you’ll get paid. Here are some ways to ensure your invoices get out quickly, and into the right hands.

Promptness counts

Send out invoices according to the timeline stated in the contract, or as soon as the project is complete.

Automate invoices

Automated invoicing, one of the most helpful features in QuickBooks, allows you to create an invoice template that can be used over and over again. You can even schedule recurring invoices.

Be persistent

Customers and clients are busy, and a payment reminder is often welcomed. QuickBooks can help here too by setting automated email nudges to remind customers that payment is due.

4. Establish Penalties

A penalty may sound negative, but they are a vital aspect of business. Think of penalties as a way to promote timely payments, not punish your valuable customers.

Here are a few ways to implement penalties for late payment:

Flat late fees

A flat late fee is a specific dollar amount set forth in a contract and implemented after an agreed upon payment date has been exceeded.

Accruing interest

An accruing interest charge compounds every week or month that payment is late. The terms of this percentage should be laid out in your contract or payment policy.

Finance charges

Finance charges cover the gamut of flat fees, a percentage of the invoice amount, accruing interest and any other forms of fees you assess clients for failing to pay. QuickBooks Invoicing has this feature built-in, so you can assess any finance charges to outstanding invoices without a huge hassle.

5. Automate reminders

You’re busy. So automated invoice reminders will save you time and a lot of stress. QuickBooks Invoicing software also offers this feature.

Automate reminders before and after the due date

Don’t wait until an invoice is 45 or 60 days past the payment date before setting up an automatic payment reminder. Like with the initial invoice, the likelihood of collecting old invoices decreases over time.

Consider auto-collection

To save you time later, consider requiring a credit card number upfront. This way if invoices aren’t paid on time, you can auto-collect past due payments.

6. Incentivize early or n-time payments

Encourage on-time payments by providing incentives for clients. This is a way of offering a thank you to customers who make payment a priority. Offering early payment perks or sending hand-written thank you notes display a customer-centric outlook.

Late and unpaid invoices create a lot friction in small business. But putting a few simple systems like these in place can greatly reduce the time spent chasing customers and get revenue in your bank account more quickly.

Using Payment Terms to Protect Your Business

By Ritika Puri June 17, 2019

As a self-employed freelancer or small business owner, knowing how to send an invoice correctly is crucial. How else are you going to get paid? You won’t. In fact, in 2016 there was nearly $825 million owed to small businesses in unpaid invoices. Yikes.

Sending a proper invoice ensures that your clients pay you the total amount on time, otherwise you have some legal recourse you can take. But you can’t just email your clients a picture saying, “Pay up.” (Well, you could, but you’d look like a real jerk.) To make sure you’re getting paid properly and your clients are respecting you as a freelancer, you need invoice payment terms.

What are invoice payment terms?

In short, invoice payment terms outline how, when, and by what method a customer — that’s your client — remits payment to a seller — that’s you. Components include:

- The total amount due
- The period of time that your client has to pay the amount owed
- Stipulations for an advance or deposit
- Payment plan details
- A list of accepted payment methods

Invoices serve as a schedule, outlining when your organization will receive income. Your invoicing system should benefityour company at a strategic level. This guide will equip you with the skills you need to send invoices successfully.

The importance of invoice definitions

The best-run businesses have control over their cash flow, tax planning, and growth position. Knowing how much money is going to hit your account and when it’s going to do so is essential to cash flow predictability. Proper cash flow predictability allows you to determine the best time to expand or scale back your business.

Invoicing is critical to cash flow predictability. By putting together a proper invoice, you ensure that clients pay you in a timely fashion. That is, assuming you have an invoice date that dictates when the client needs to pay you and what the penalties are for missing a payment. If not, your cash flow projections will be off, adversely impacting your company.

For instance, imagine that you’re a baker about to open a new store next month. To do so, you need to purchase $5,000 in kitchen equipment. You recently catered a large event and submitted an invoice for $7,000. You estimate that the customer will pay the invoice by the end of the month.

However, they do not do so. As a result, you cannot purchase the kitchen equipment. Now, you’re paying rent for the second store, even though you’re not conducting any business out of the location. You begin to lose money as a result of the late payment.

This is a simple example, but it’s one that clearly demonstrates the need for timely invoice payments. Putting together a concise, easy-to-understand invoice will go a long way toward ensuring you receive payments on-time.

Types of invoices

The first step toward making sure you invoice properly is sending the correct kind of invoice to your client. There are a few types of invoices that you could send.

Purchase invoice

A purchase invoice is the first type of invoice that you’ll send to a customer. You should send the purchase invoice, or purchase order, as soon as you agree to the contract. A purchase invoice provides a quote to the customer based on the terms they agreed to.

Pro forma invoice

A pro forma invoice gives your client an estimation of the total cost of goods and services. A pro forma invoice is similar to a purchase order, except for the fact that you provide it after you’ve begun work. By providing your client with an up-to-date quote, you allow them to get their finances in order, increasing the chances of on-time payment after you finish working.

Sales invoice

While you submit a pro forma invoice in the middle of a contract, you send a sales invoice after the completion of a contract. A sales invoice is the most common type of invoice. It serves as a request for payment, detailing the goods or services you provided to the customer. You’ll provide a sales invoice to a customer after a transaction. The sales invoice will serve as a record of sale for both you and the customer.

Interim invoice

If you enter into a large contract with a customer, you may not want to wait until completion to receive payment. For instance, imagine you enter into a three-year agreement. You could opt to receive payments, say, every three or six months. Or you could invoice based on when you complete a particular stage of the project. You would submit an interim invoice to do so. You should discuss this timeline with your customer before you begin work.

Recurring invoice

If you provide ongoing services, you’ll need to submit a recurring invoice. An example of an ongoing service would be an attorney who’s on retainer. Recurring invoices are also standard for businesses that provide membership or subscription services.

Essentially, a recurring invoice is a great fit for any type of work that doesn’t fluctuate, or for a recurring fee like the retainer one previously mentioned. If you have clients that require the same exact work every single month, they might be a great fit for a recurring invoice.

How often you set a recurring invoice is up to you, but many professionals stick to once a month. This keeps billing nice and tidy for both you and the client.

Past due invoice

If your client doesn’t pay within your pre-defined period, you’ll want to send a past due invoice. A past due invoice details the remaining balance the customer owes. It would also detail any interest you’ve charged the client as a result of their delay.

Controlling the timing of a payment

When negotiating a contract, payment terms are essential. Payment terms should maximize how quickly you’re paid while also minimizing inconvenience for your customer.

It’s essential that your financial picture matches your business goals. Selecting the correct payment terms ensures a healthy business. Below are some of the payment terms that you could choose. You’ll want to include these payment terms on the invoice, but only after having discussed them with the client.

Prepayment

You can require customers prepay you for services. If you have a wedding photography business, for instance, you do not want to run the risk of cancellation. So you may want your customers to pay in full up-front. Many business owners will offer a discount to those who pay in full in advance.

50% up-front

You may not have enough capital to complete a project. If a customer is unable or unwilling to pay the entire balance up-front, one option is to compromise with a 50% deposit. Both organizations take on an equal risk. Make sure you also negotiate when you will receive the remaining 50%.

Immediate payment

Immediate payment refers to a transaction for which payment is due as soon as you deliver goods or services. Examples of immediate payment terms include “cash on delivery” (COD) or “payable upon receipt.” You may negotiate into the contract that you can repossess goods if the customer does not provide immediate payment.

Net 10, 15, 30, 60, or 90

These terms refer to the number of days in which a payment is due. For instance, Net 30 (or N/30), means that a buyer must settle his or her account within 30 days of the date listed on the invoice. For example, If you date your invoice March 9, clients are responsible for submitting payment on or before the 8th of April.

Choosing “Net” payment terms could be inconvenient for you as a business owner, as you’ll have expensed the entire project without yet receiving income. However, these terms are often quite useful for the customer. Try to find a period that works for both you and your client.

Lines of credit

Line-of-credit payment terms offer buyers credit toward the products and services they purchase. Customers can then repay the balance on a quarterly or monthly basis. There is a bit of risk involved with this, as the customer could default. Typically, only larger organizations use these payment terms.

Installment agreements

Installment agreements are similar to line-of-credit payment terms, except they’re cash-based. Companies split up big projects into milestones. The customer then pays upon hitting a milestone. Installment agreements could be based on time — every three months, for example — or upon delivery of a specific part of the project.

Subscriptions and retainers

Subscription and retainer payment terms require customers to pay regularly, such as monthly or annually.

Early payment

You can provide customers with an incentive to pay early. For example, consider offering a 5% discount if the customer pays the total balance in full before the due date. Early payments are a win-win. Customers receive a discount on your goods or services, and you’ll have enough capital to complete the project without having to stress.

Controlling payment methods

In addition to controlling the timing of your payment, you also have a say over how the customer pays you.

The simplest way to define your payment policies is to make the process as convenient as possible for the customer. For instance, you may be accustomed to receiving paper checks or cash. However, expanding your accepted payment methods will increase the likelihood of on-time payments. Two of the more modern payment methods you’ll want to consider are smart invoices and mobile payments.

Smart invoices

Software like QuickBooks enables customers to pay anytime, 24/7. Business owners can also set up free Automated Clearing House (ACH) bank transfers with direct deposits. This could be particularly useful if you have an ongoing contract with a customer. You could set up automatic direct deposit withdrawals, which would reduce the guesswork associated with invoicing.

QuickBooks online offers a free email and ACH payment merchant service account. If you don’t set up direct deposit, you could email invoices to the customer directly with a link for payment.

Credit card payments

You can accept credit card payments as well. You can request that the client provide you with a credit card number, or you can use QuickBooks, which comes with the hardware necessary to accept credit card payments in person using a mobile device.

There are fees associated with credit card payments. Some business owners choose to pay the fees themselves, while others opt to pass them along to the customer. If you choose the latter, you’ll want to indicate this in your contract with the customer. The contract should clearly explain that in addition to the principal, you’ll also charge the customer the cost of the credit card fee if they elect this payment method.

Other information to provide

There are a few other things that you’ll want to include on your invoice as well. You’ll want to add an invoice number. This will allow both you and the customer to track invoices chronologically. You’ll also want to provide your contact information. That way, if there are any disputes, the customer knows exactly who to contact so you can resolve the problem quickly. You can also indicate where you want the client to send a payment receipt.

Define your terms in a contract

It’s crucial to negotiate your payment terms with your customer before you begin work. Work together to determine what will be the right approach for both sides. Once you come to a consensus, outline these terms in your contract.

This documentation gives you legal standing in case your customer doesn’t pay on time. If you don’t receive prompt payment and your customer ignores your past-due invoices, you may need to take legal action to recoup the funds you’re owed. If you don’t have a contract in place, you won’t have any legal standing in a court of law.

This is also the perfect place to outline any late fees you plan to impose. Will there be EOM, or end of month, fees? How about punishment or fees for non-payments that go missed entirely? This area serves to protect both of you, so it’s in your best interest to be as thorough as possible.

Invoicing for on-time payments every time

Cash flow is the underlying financial infrastructure for your company’s operations. Receiving prompt payments from customers allows you to focus on your day-to-day business functions and growth.

If you’re looking for examples of invoices, be sure to check out our free template. This template allows you to enter the necessary information to produce a professional invoice for your client. Also, remember that QuickBooks can help streamline your invoicing process to ensure on-time payments.

How to follow up on past due invoices

By Cathie Ericson June 25, 2020

You’ve done your part: You delivered the product or service. Now, it’s time for your customer to do their part: Pay the invoice.

Almost every small business owner knows the frustration of a past due invoice—in fact a study from Freelancer’s Union finds that more than 70 percent of freelancers have had difficulty collecting payment at some point in their career. The most common issue? The client doesn’t pay on time

The worry is real: After all, you can’t pay your bills if your client doesn’t pay theirs. But the important thing is to not panic. And to stay positive. Even if you have to work a little harder to collect.

Here are some steps you can take if your client doesn’t pay an outstanding invoice on time.

1. Did you agree to a preferred invoice payment method up-front?

For faster payments, hold the invoice conversation right at the start, before you do the work. If it’s too late for that, don’t beat yourself up. There’s always next time.

But it can be easier to get payment if you’ve determined these two specific logistics of what your client wants and needs in an invoice.

Who should get the invoice: Sometimes it’s the client themselves, sometimes it’s the accounting department, or both. Make sure you know the procedure to expedite smoother, faster payment.
How they like to pay. Offering your customers more payment options, such as credit card, eCheck, or direct ACH bank transfer, ensures that there’s no holdup for an easily avoidable reason.

It’s an extremely common situation – a client becomes accustomed to paying for almost everything one way, only to become inconvenienced when that payment method isn’t available. If they pay for everything by credit card, and you’re asking for a check, they may not ever find the time to locate their checkbook, get a stamp, and put the check in the mail.

If your client hasn’t paid you on time, asking, “would you prefer to pay another way?” may be all it takes to get paid on-time in the future.

ProTip: We’ve found that clients pay up to 2x faster with QuickBooks’ Pay now feature.¹

2. Does your invoice make it clear what your customer is paying for?

Clients are more likely to pay on time when the invoice makes what they’re paying for crystal clear.

That’s why you want to make sure you’ve included all the information a client needs. This could include:

Consultation time
Hours spent on specific tasks
Research time
Distinct project numbers for pre-defined deliverables
Cost of materials

While the invoice is your tool to help you get paid, for your client, the invoice is a way to answer the “What exactly am I paying for?” question.

If you haven’t yet cataloged your products or services, it’s a worthwhile exercise that can make everything from marketing your business to sending invoices more efficient in the future.

Also, check that your payment terms are featured in a prominent place on your invoice design. Without clear payment terms, it’s your word against theirs when an invoice is actually “late.” About one quarter of invoices don’t have a due date on them, making it harder to follow up.

You may be tempted to put “Immediate payment,” but that can be confusing to some clients. Adding a date gives them a concrete target to meet. The most common payment term is “Net 30,” which means the recipient must pay their invoice within 30 days of the invoice date.

3. Do you have a follow up system for past due invoices?

Having “the conversation” about past due payments is a huge source of anxiety, especially when paying your own bills on time depends on the cash flow this late invoice represents.

However, like everything else we’ve discussed, having a system for following up on late payments can help you keep calm, and move on to your other work.

Accounting software does make following up on late payments easier, because, unlike manual systems like Word or Excel, you can sort invoices by client name or due date, and set up automatic invoice reminders for overdue payments.

Here’s an idea of the intervals and types of messages you can send to clients who haven’t paid on time.

Day 1—Payment due date

If you haven’t received the payment by the due date, check to see if they even received the bill: Using QuickBooks allows you to see if your client has viewed the invoice, which can tip you off that they might just have overlooked the email.

Either way, send a polite email reminder mentioning that perhaps the invoice has gotten lost in the shuffle. That might be enough to jog them to remember to send it. Or, they may say “the check’s in the mail,” in which case you know payment is coming soon.

To make it easier to send these polite reminders, QuickBooks allows you to create automated messages that you can send your clients.

ProTip: Try sending an automated reminder a week before the invoice is due to give them a heads up!

For your convenience, here are some invoice reminder email templates you can use to message your customers/clients. Remember to customize them to your specific business, and match the tone of your relationship with them. These are meant to be guides to help you get started.

Invoice reminder email

Invoice due email

Day 15—Two weeks late

When your payment is two weeks late, that’s when you may start feeling panicky.

That’s a good time to reach out with a polite phone call to reconfirm they have the invoice and see if they have any questions. Sometimes they neglected to tell you that there’s some specific information they need for their own system, like a PO number. Or it could be that your invoice got lost in the inbox of “Carol in Accounting” who’s been on vacation. There is almost always a good reason why your invoice hasn’t been paid, so don’t be shy about asking.

And here is a past due invoice email template that you can simply copy, paste, edit and send to your customer:

Past due invoice email

Day 30—One month late

This may feel like it is bordering on rude, but that doesn’t mean you should be.

Keep calm and stay professional in your follow up.

If you have already spoken with the client, resend the invoice, along with any new charges, and reference the conversation you had and any concrete plans they had stated to send payment. In addition to email, send it via snail mail, which might get their attention.

You can also begin assessing late payment fees—but this is important—only if you had first explained it in your new client onboarding.

Hitting a customer with an unexpected late fee could cause more animosity than it’s worth. However, it’s perfectly fine to state your terms for late payments right up front and then be sure to itemize them on the next bill.

At this point, you may want to dial up your persistence. Be clear that you need to be paid and make sure you’re talking to the right person. If you are dealing with the accounting department, it might be time to get your client involved again as they have a vested interest in seeing you get paid in a timely fashion so the work can go on.

And that’s because this is an ideal time frame to cease current and future work. Politely let your client know via email that you will have to stop working on current projects until the bills are current.

Here is a 30-day past due invoice email template that you can simply copy, paste, edit and send to your customer:

30-day past due invoice email

Day 60—Two months late

If 60 days is considerably past your invoicing terms, you may want to consider:

Using an invoice factoring agency
Sending the bill to a collections agency or…
Writing the invoice off as bad debt and move on

Here is a 60-day past due invoice email template that you can simply copy, paste, edit and send to your customer:

60-day past due invoice email

But remember, don’t panic

Of course, this timeline represents the worst-case scenario; in most situations, all you’ll need is a simple follow up reminder email, maybe provide more payment options, and your payment will be on its way.

By proactively setting up accounting systems and processes that provide clarity and keep you protected, you’ll be able to focus more on doing the work and growing your business, and less on the administrative headache of getting paid.

Invoicing and accepting payments

Smart online invoicing with built-in payment processing

Smart online invoicing with built-in payment processing

Low, flat rates. No monthly or setup fees.

Rates per transaction

1%

2.4%

2.9%

3.4%

Low, flat rates. No monthly or setup fees.

Rates per transaction

1%

2.4%

2.9%

3.4%

Low, flat rates. No monthly or setup fees.

Rates per transaction

1%

2.4%

2.9%

3.4%

Low, flat rates. No monthly or setup fees.

Rates per transaction

1%

2.4%

2.9%

3.4%

Send professional, custom invoices

Send professional, custom invoices

Send professional, custom invoices

Accept payments in QuickBooks and get paid 2x faster 1

Accept payments in QuickBooks and get paid 2x faster 1

Receive instant notifications

Receive instant notifications

Automatic matching

Automatic matching

Smart payment tools

Smart payment tools

Accelerated invoicing

Accelerated invoicing

Build customer trust and grow your business

Build customer trust and grow your business

How to create invoices

Payment terms on invoices

Do I need a payment contract?

Should I require a deposit?

How to accept invoice payments

Tracking invoices

Sending Payment Reminders

The cost of getting paid

When clients don’t pay

1. Did you agree to a preferred invoice payment method up-front?

2. Does your invoice make it clear what your customer is paying for?

3. Do you have a follow up system for past due invoices?

Accept payments in QuickBooks and get paid 2x faster¹

Accept payments in QuickBooks and get paid 2x faster¹