Invoicing Clients - Payment Terms

[mattfx]

I've done a bit of extra project work in addition to my mon-fri contract for another clientco of mine as a professional services engagement. I gave them 14 day payment terms after I checked that they were in a good financial position on DueDil. Today is due day and no money has landed in my account. After a chasing email suggesting that they should politely pay me what they owe, I received the following by way of response:

"Hi Matt,

Unfortunately I need approval from the FD before I can process your payment. We process payments Wednesdays and Fridays"

- Now, I was very polite responding and suggested they pay both this invoice and another which I've just submitted for another piece of work together in the next pay run which, if they do, will be great. However, it's not as if my first invoice becoming overdue is a surprise and they've had two weeks to sort out "sign off" from the FD.

Is this just par for the course when chasing direct / professional services clients for payment? Have I been too lenient? Should I have reminded them the invoice was nearly due last week? I am still very new to this part of business and any help is appreciated.

Also I use SJD for my accountants - should I be offloading chase activity to my accountant?

Thanks

[SueEllen]

Accountants doing debt chasing?

Normally as a business owner that's your job as you are the one who generated the invoice.

[mattfx]

Accountants doing debt chasing?

Normally as a business owner that's your job as you are the one who generated the invoice.

I'd read on a guide from Xero that some accountants will do this for their customers - just wondered if anyone here had experience with that. I'm more than happy chasing myself, but if I can make my business more efficient by utilising SJD more then that's got to be a good thing!

[WTFH]

What does your contract say? Is it 14 calendar days, 14 business days, 14 days from invoice date, 14 days from receipt of invoice, etc?

You don’t remind a business that an invoice is “nearly due”, it’s either due or it’s not.
Check your signed contract first, then check the dates on the paperwork, then wait and see if it comes through this week.
When you go direct with a client, you realise that agents sometimes are useful by paying you on time (if they do), but clients can sometimes be a bit more difficult, particularly if you don’t know them well enough to know their payment runs.

The invoice you have just submitted will probably not be paid until 11/10 at the earliest.

[SueEllen]

I'd read on a guide from Xero that some accountants will do this for their customers - just wondered if anyone here had experience with that. I'm more than happy chasing myself, but if I can make my business more efficient by utilising SJD more then that's got to be a good thing!

Why don't you ask them?

My accountant does the minimum for me.

[mattfx]

There's no contract WTFH - this was a 2 day piece of work to complete a small project carried out as professional services. So I sent a quote, got a PO number from Mr Customer by means of agreement, carried out the work and then invoiced for it upon completion as agreed in the quotation. You've made a great point though, I should put 14 calendar days on my invoice rather than just "14 days", or better still an explicit due date...

[WTFH]

There's no contract WTFH - this was a 2 day piece of work to complete a small project carried out as professional services. So I sent a quote, got a PO number from Mr Customer by means of agreement, carried out the work and then invoiced for it upon completion as agreed in the quotation. You've made a great point though, I should put 14 calendar days on my invoice rather than just "14 days", or better still an explicit due date...

You need to put the payment terms on the quote, not just the invoice. The quote is the agreement that they accept - if you did not have your payment terms on there, then they can argue that you go onto their standard payment terms (which could be 30, 45, net monthly, etc)

[mattfx]

You need to put the payment terms on the quote, not just the invoice. The quote is the agreement that they accept - if you did not have your payment terms on there, then they can argue that you go onto their standard payment terms (which could be 30, 45, net monthly, etc)

Okay, think I cocked up there. I put "payment due upon completion of service" on the quotation - so you're saying that the quote and the invoice need to be aligned?

[WTFH]

Okay, think I cocked up there. I put "payment due upon completion of service" on the quotation - so you're saying that the quote and the invoice need to be aligned?

Yes, the quotation needs to be precise. You should specify the terms of payment in the quote, then those are the same terms that go on the invoice.

I’d steer clear of payment on completion, as they may argue that the work isn’t complete and hold off payment if they want to. I normally go for “Payment due 30 days from date of invoice”, so if you quote an hourly/daily rate rather than a fixed price to do the work, then you have flexibility to charge more as the work drags on.

[SteelyDan]

I normally go for “Payment due 30 days from date of invoice”

Yep similar '30 days payment terms' however some direct clients may have a tendency to stretch this beyond 30 days, so watch out. One of the disadvantages sometimes of going direct, imho.