Strong terms and conditions for your invoices are extremely important to your small business. If your bills are difficult to understand or confusing to read, it can seriously hurt your cash flow. Why? Mainly because if the customer can’t understand his bill, he won’t pay. Your client wants to be sure that he is being quoted the correct amount of the goods or services that he ordered.
1. Start thinking about all possible legal issues and scenarios.
The first thing you should do before writing your terms and conditions is to list all the possible legal obstacles or circumstances that could occur.
As an example:
- What action will you take if the customer does not pay the invoice?
- What will happen if you are late in delivering your services or products or services to the customer?
- What will you do if the customer is not satisfied with your products and services?
- What will happen if the product or service is damaged while being provided by your customer’s delivery service?
- Is there an incentive if your clients pay in advance?
- What type of interest rate would you like to charge for late payments?
- What if the client is interested in renegotiating the contract right after both parties agree to the terms and conditions?
- Can your customer request a refund? If so, what scenarios would allow this?
- What will happen if the scope of work is expanded?
- If there was a calculation error in an estimate or quotation, who is going to pay for it?
- Who is responsible if a product breaks after I bought it?
- What strategy will you undertake if the agreement or contract is terminated?
It may take a bit of time to think through and formulate this list, but as soon as you’ve written all of this down, you’ll be in a position to write future terms and conditions in no time with the other clients you’ll be adding. your customer list. Most importantly, having the most appropriate terms and conditions for your company will ensure that you receive compensation and take care of your business if legal action is ever taken.
2. PROVIDE ALL THE CRUCIAL PARTS OF AN INVOICE.
Presenting all the important elements of an invoice will not only speed up the checkout process, but also answer any questions the customer has regarding the goods or services you provided.
When generating invoices, be sure to include:
- your logo
- invoice number
- your contact information
- Your customer’s contact information
- The expiration date
- The products or services you provided and their costs
- The forms of payment you accept
- Discounts on invoices for early payment or application of charges for late payments
Before you mail the bill, make sure all the information is correct and that it is being sent to the correct person. Any mistakes can easily slow down the checkout process and make it look less professional.
3. CLEARLY EXPLAIN THE PRODUCTS/SERVICES THAT ARE OFFERED OR THE SCOPE OF THE PROJECT.
This is without a doubt the most relevant part of the terms and conditions of your invoice. Why? Because it describes what the customer is paying you in particular.
For example, if you’re hired to build a website for a client and it’s more than the client imagined, having a description of the time and expense it took to complete the job answers any questions or concerns related to the final amount of the invoice.
4. REDUCE YOUR PAYMENT TERMS
This should be {a little} obvious, but when you give customers a lot of time to make a payment, it takes longer for you to get paid, which in turn leads to slower cash flow.
So if you have a customer 45 days to pay an invoice, for example, and that customer paid you a couple of weeks late, that means you’ve waited a full 2 months for a payment.
A payment term of 30 days or even less is the standard when it comes to invoicing simply because it is helpful in maintaining cash flow. However, please review your industry’s billing standards and verify with the customer when their payment cycle runs. These factors can help you set your payment terms.
5. HIGHLIGHT GUARANTEES AND GUARANTEES
It’s not uncommon for any business that sells goods and services to give warranties and endorsements far too often. It makes them look more legitimate and reputable and gives the customer security. If you provide a warranty or guarantee, make sure it is clearly outlined in your terms and conditions.
Never forget to address issues like situations where the customer/client loses their warranty or guarantee.
6. CHASE THE PURPLE PAYMENTS.
There will usually be times when customers won’t pay bills before the due date. Instead of being passive, you need to be persistent in tracking down those particular late payments.
Regularly track your customers’ payment due dates and contact them by phone, email or mail if they haven’t paid you by the due date and have late payment penalty terms on their invoices , like charging interest on overdue payments, which a reliable cloud-based billing software will do for you automatically.
In the event that you are unable to contact the customer who is paying late, or if they do not respond to follow-ups, you may need to send a collection letter, hire a collection agency, or take them to court. Make all of this information very clear from the start.
7. ONE SIZE DOES NOT FIT ALL.
Make sure your terms have been created specifically for your business. Remember, your business does not have the same requirements, resources, and customers that other businesses do. Because of this, you can’t just copy and paste the terms and conditions from a commonly used template or another company, as they probably won’t meet your particular needs.
A template is really good to get you started and point you in the right directions, but ultimately you need to write terms and conditions that work best for your business and clientele.
8. ALWAYS BE PROFESSIONAL AND COURT.
Being courteous can have a beneficial influence on your business. Simply adding a phrase like “kindly pay your invoice within twenty-one days” or “thank you for your business” can, in fact, increase the number of invoices that get paid by more than 5 percent! This may not seem like much, but this can generate thousands of US dollars per year directly into your bank account.
In addition to helping you get paid faster, being professional and courteous can easily improve your brand image.
9. MAKE THE TERMS AND CONDITIONS EASY TO READ.
Keep the language in your conditions and terms simplified and intuitive. Put yourself in the shoes of your clients’ clients and realize that not everyone is familiar with industry terminology and even accounting terms such as “net 30”.
Also, don’t try to hide everything on a single page by using a tiny font so your customers can’t read the fine print. It will appear misleading to your customer and will ruin your reputation (regardless of whether there is anything misleading on your bill).
10. WHEN IN DOUBT, ASK FOR HELP.
When all else doesn’t work out as expected, or you end up in a sophisticated or specialized situation, don’t hesitate to seek guidance from your mentor, fellow business managers, or your attorney. These are people who have experience writing terms and conditions and are more familiar with the laws and regulations than you are.