Invoice payment terms

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As a business owner, you can determine the payment terms yourself. However, there are some rules that you need to follow when setting them. If you forget to include a payment term in your invoice, the recipient of such a document will have to pay it within a legal period, depending on the country where you operate your business. Therefore, it is better to specify it. What are the most common payment terms? Are there any limitations? You can find out more about this in the following article.

Invoice Payment Terms – Index:
Common payment terms
Why is it a good idea to define a payment term at the beginning of the cooperation?
Why do large companies need longer payment terms?
Why do long payment terms affect your business?
How to encourage your contractors to pay their invoices quickly?
Common payment terms
While you have a lot of flexibility when it comes to setting payment belarus whatsapp number database for your invoices, it’s worth checking out how others do it. Which payment terms are most common in practice? Here are the most popular ones:

7 days,
14 days,
30 days,
60 days,
90 days.
In some countries, the legal payment period is 30 days. This is the case, for example, in the United States, where invoices issued by freelancers must be paid within 30 days. Similarly, in the United Kingdom, the standard payment period is 30 days after receipt of an invoice, delivery of goods or provision of services.

On the other hand, in some European countries, a recommended payment period for asymmetric transactions, i.e. transactions where the parties differ in size, is 60 days. The exception is transactions with public entities, which must pay the invoice within 30 days. However, nothing prevents you from setting a shorter payment period, for example 21 or 14 days. When should you inform your contractor about the chosen payment term?

terms of payment
Why is it a good idea to define a payment term at the beginning of the cooperation?
You should remember that things like payment dates should be set when you sign a contract or accept an order. Why? If you don’t set a payment date before accepting an order, your contractor will expect to receive an invoice with a legal payment period. If you invoice them with a shorter period, they will have the right to be surprised. This will not reflect well on you, especially since paying the invoice after the due date can result in interest charges.

Therefore, it is best to be clear when accepting an order. It will be sufficient if, in the email correspondence related to establishing the order details, you mention that you plan to issue an invoice with, for example, a payment term of 14 days. In this case, your contractor will be aware that he will receive a document from you, which must be paid within the indicated period. In this way, you will give the impression that you are a professional who takes care of all the details of the transaction.

Why do large companies need longer payment terms?
If you’re a freelancer or run a small business, you probably don’t receive many invoices. The path from receiving an invoice to paying it is fairly short, especially when you use accounting software that makes it easy to track costs. You can easily check whether you’ve ordered the goods and services listed on the invoice. Then, you just make a transfer to your bank and that’s it.