As a freelancer, before you commence any client work, it’s essential to agree on your freelancer payment terms and conditions and get them confirmed in writing.
Your payment terms should be clear so that there is no room for ambiguity should a dispute arise. This will help avoid any unwelcome surprises down the line and help you get paid accurately and on time.
Your freelancer payment terms and conditions usually form part of your client’s written agreement or freelance contract, and they should be included in all relevant client documentation, such as your invoices, including the date due, amount, late payment fee, etc.
Here are 10 important things to include:
1. Payment due date
Your payment due date (when you want the invoice paid) may be a specified date, for example, at the end of the contract, once you’ve completed the work and deliverables.
If you have regular clients, it might be a set date each month, for example, at the beginning or end of each month. You could have a payment schedule where you send recurring invoices, or your business could run on a subscription model. Also, bear in mind that your client might only process invoices on a specific date each month.
The key point is that both parties know (and are in agreement on) the date the payment is due.
Where clients need to be billed on a fixed schedule, you can save time with Invoice Ninja by automatically billing long-term clients with recurring invoices. Auto-billing is a feature that enables the payment system to capture your client’s credit card details safely and securely and store them for billing at a future date.
Try Invoice Ninja for free here.
2. Method of payment
It’s important to include your method of payment (for example, bank transfer, debit or credit card, check, cash, or via a third-party payment provider etc.) and ensure it is compatible with your client’s ability to use it.
For example, their internal processes may not accommodate paying by check, or their jurisdiction may make direct bank transfers inconvenient.
Invoice Ninja offers multiple payment gateways. A payment gateway is the tech that allows your clients to pay you securely and swiftly online. Multiple payment gateways give your clients more choice in how they pay you. Our payment gateways include Stripe, PayPal, GoCardless, and more. Plus, our BTCPay Server integration means you can now receive bitcoin payments directly to your wallet with no fees.
Integrating your Invoice Ninja account with a payment gateway allows clients to pay their invoices with 1-click!
The payment gateway processes the transaction in the background, so your client never has to leave their Invoice Ninja client-side portal. Seamless!
See all our payment gateways here.
3. Late payment
Your policy and fees for late payment of invoices should be made absolutely clear.
This would include the fee, whether a set fee, percentage, or something else. Also, what will happen in the case of late payment? Will you send a reminder? Will there be a period of grace? What are the time frames before you take further action?
If clients know there will be financial consequences for late payment, they will be more likely to avoid it and ensure you are paid on time.
4. Discounts
If you offer discounts for early payment, include them. These can act as a good incentive for clients to pay you early. For example, you may give a discount on an invoice if they pay you 10 days early.
For instance, if your standard payment terms are Net 30 (meaning the invoice is due within 30 days), you could apply a percentage discount if it is fully paid within 10 days.
Discover more invoice and payment terms in our post here.
5. Deposit
If you require a full deposit or partial deposit before commencing work, ensure this is stipulated in your payment terms and conditions. When the client accepts your quote, send the invoice immediately so you can get paid.
With Invoice Ninja, you can send a deposit invoice and have it converted to a regular one for the balance due once the initial deposit has been paid.
You can also configure the capture of signatures and acceptance of terms prior to a client paying an invoice or approving a quote.
6. Currency
Do you invoice in a specific local currency? Perhaps you have overseas clients, accept multiple currencies, and operate foreign currency bank accounts. This needs to be included in your payment terms and conditions. Being more flexible may even open up more avenues of business. But you’ll also need to factor in the cost of any foreign currency exchange into your prices or stipulate whether you pass the cost on to your client.
Therefore, it’s helpful to have state-of-the-art invoicing software that allows you to bill in foreign currencies. Invoice Ninja supports dozens of languages and currencies.
7. Pricing and rates
Your pricing and rates need to be clearly laid out, especially if you use different pricing strategies depending on the type of work you are performing. For example, you may have a set project fee, but anything over and above what was already agreed upon may incur a further charge, or you may charge an hourly rate for consultation aspects of your work.
Make it clear what payment is due for a set of deliverables or specific products, along with timescales and any fees for items outside the project’s scope.
8. Cancellation fee
What happens if the client cancels the project? Will they incur charges? You should at least ensure you are paid for the work completed to date or have a set cancellation fee. Likewise, if, for whatever reason, the client is not happy with your work – do you have a refund policy? Setting these out now will help prevent potential misunderstandings at a future date.
9. Expenses/reimbursements
Make sure you are transparent about any expenses incurred that the client will be charged for, e.g., travel or material costs. If you have overseas clients, you should also include currency transaction costs if you pass them on to the client.
You can keep all records up to date and run accurate reports by importing expenses to Invoice Ninja. Expense importing can be done manually anytime, or you can automate it with our new banking Yodleee integration.
10. Contact details
Sending your invoice to the wrong contact can result in delays.
Include details of contacts for both parties so you both know who you are dealing with when it comes to your invoice payments. This includes name, address, department, email, etc.
The person you deal with regarding client work may not be the same person who is responsible for paying your invoices.
There may also be specific cost centers that you need to include on your invoices so it gets charged to the right department and cost code.
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The above includes just some of the more pertinent items to include in your payment terms and conditions, but, of course, much will depend on your specific business and how and where it operates.
It may be that there are governing laws or restrictions in your region or state regarding taxes, payment terms, and late payment, so ensure this is also covered to ensure you are fully compliant. If in doubt, it’s always best to seek professional advice.