How about getting paid instantly?
What if you get your payment as soon as your client receives the invoice?
Getting paid almost seems like nailing jelly to the wall, especially when it comes to freelancers and small businesses.
You finish your work on time, and send an invoice but probably have to wait for ages to get paid. It happens most of the time and is frustrating. However, there is one foolproof way to get paid on time. Next time when you set your payment terms before starting a project, make sure you label your invoice “Due Upon Receipt”. This is a perfect payment method for the one-time client and one-time job.
Due upon receipt means payment should be made immediately upon receiving this invoice.
If you think this payment term can be beneficial for your business, then go ahead and know everything about it:
What Does ‘Due Upon Receipt’ Mean?
The term ‘Due Upon Receipt’ means the client has to make payment as soon as the invoice is received. As soon as possible or instant payment also means the client can make the payment by the next business day.
However, thanks to modern online payment technology, now it is possible to get paid in a jiffy. With online payment gateways and digital payment means, you can ideally get paid on the same day or even instantly.
Payment Due Upon Receipt Template
It is a great move to start adding ‘payment due upon receipt’ on every invoice you send and increase your chances of getting paid faster. But it may not be feasible for every job.
When to mark your invoice, ‘payment due upon receipt’?
Now after understanding this payment term, any business would certainly be excited to embrace this option, wouldn’t it? Who wouldn’t love to get paid fast? Unfortunately, due to receipt invoices don’t work best for every line of work.
For any new client who requires only a one-time job or if you realize the client is not as interested in repeat business then this type of invoicing term is ideal.
For works like website designing, mobile app development, and logo design, due upon receipt is a feasible choice.
Pros of Due Upon Receipt
One of the biggest advantages of this invoicing term is quite evident and that’s faster payment. You can expect payment for your work done within 24 to 48 hours while with online banking it’s just a matter of minutes. So, ultimately you are assured of smooth cash flow.
Now if you are working as a freelancer or even a small business, you might have a lot on your plate and tend to forget to check the payment sent against the invoice. This can be risky for your budding business. Adding the label ‘due on receipt’ can lessen your burden and effortlessly help you to receive payments on time.
Looking through hundreds of emails and documents to identify pending invoices is an uphill struggle. Instant payment option saves all your time and effort. Online invoicing software can make your task more hassle-free.
Cons of Due Upon Receipt
Yes, this invoicing term looks so beneficial but it comes with no guarantee. It doesn’t assure you that your client will pay within the next business day. Sometimes the clients themselves are waiting for their source of income, only if they get paid, they can make your payment. So in such situations, there is no choice left rather than to wait.
Some clients also prefer to make payments after reviewing the work delivered. Generally, if they are satisfied with your work and if it meets their expectations then you might get paid as per terms or else suggestions. Modifications may delay your payment.
If you are unsure of the client’s behavior, it is always wise to discuss your payment terms beforehand. It is vital to inform your client beforehand about your expectation of immediate payment after the invoice is sent as it prevents negative impact and disputes.
Should you be using the due-on-receipt method for immediate payment?
“Due upon receipt” in invoice payment terms can be a good choice, but some people still question if it is the right option for them. It specifies that payment is expected immediately when the customer receives their goods/services or the invoice. This can help accelerate cash flow for businesses that rely on timely payments, especially for perishable goods. However, it depends on the customer and the relationship you have established. It can be challenging for customers who take time to pay, and it can strain the relationship if not communicated properly.
Before using “Due upon receipt,” consider your customer’s expectations and industry standards. You can offer discounts for early payment, for example, a 2% discount if paid within 10 days, or a 4% discount if paid within 20 days. Ultimately, choosing the right payment method will help balance your cash flow needs and maintain good relationships with your ideal customers.
How should I word a prompt payment request?
When drafting a request for immediate payment, it is vital to maintain good business relationships by being polite and professional. If you are encountering difficulties in communicating changes to your payment method and are implementing “Due on Receipt” invoicing in your business, start by expressing gratitude for your customers’ purchases. Explain your payment expectations, including the invoice number, reference, and due invoice date. Politely and directly express the need for immediate payment. Specify payment details such as bank account information or relevant online payment methods.
Examples:
Grateful Acknowledgment:
“We appreciate your immediate payment upon receiving this invoice. Thank you for your prompt attention.”
Friendly Reminder:
“Just a quick reminder that the payment for this invoice is due upon receipt. Thank you for your swift payment.”
Firm and Professional Tone:
“Thank you for your recent purchase. Payment is due upon receipt of this invoice. Your prompt action is appreciated.”
Tips for setting up effective invoicing:
- Ensure your invoices are clear and concise, including all necessary details such as your company name, address, contact details, invoice number, due date, issue date, list of the products/services provided, quantities, rates, and the amount due.
- Demonstrate your commitment to receiving payment by following up on invoices consistently.
- Consider adding late fees to your terms and conditions, and streamline your invoice template to ensure all necessary information is included with each invoice.
- Utilize automation to reduce errors, save time, and guarantee that invoices are sent out promptly.
- Making your expectations clear doesn’t make you demanding, but it will set clarity between you and your customers. Politely tell them, “Thank you for your recent purchase. Payment is due upon receipt of this invoice, and your prompt action is appreciated.
- Send invoices promptly after delivering goods or services to minimize payment delays.
- Maintain professionalism and brand identity by employing consistent branding on your invoices, including logos, colors, and fonts.
Are there any better payment terms than Due Upon Receipt?
It predominantly depends upon the type of business/service and client. Apart from Due Upon Receipt, many businesses, as well as freelancers, use the ‘Net D’ payment term. The letter “D” refers to the number of days. This is a payment term that allows the customers to pay their outstanding invoice within 10 days, 15 days, 30 days, 45 days, or 60 days. Since the client/business gives enough time to the customers to make the payment, late payment issues are likely reduced. Even customers find this payment term useful.
Net D will help to effectively manage your accounts by keeping you aware of the latest due date.
Conclusion
Due upon receipt can certainly speed up payments but it has its downside too. As mentioned before, if you deal with one-off projects, this invoicing term is worth trying. However, first, discuss your terms with your client and then label your invoices “Due Upon Receipt”.
