Invoicing Partial Payment
When your client pays a part of the total invoice, it is called a partial payment. In such an invoice, the buyer pays less than the due amount. It could be a specific amount or percentage of the total invoice. Also called upfront payments, such invoices are useful for managing unanticipated business expenses while working.
There are many ways to get your partial payment invoice cleared quickly and increase your probability of getting paid at the end of the project. Read on to discover the five steps for professionally requesting partial payment.
Steps to Request Partial Payment Upfront
Freelancers and small businesses often demand partial payments before starting contracts with new clients. This gives a sense of surety about getting paid at the end of the project. Partial payments are most applicable for fixed-price projects where the total costs are quoted already.
Follow the steps listed below to request partial payments from clients.
Study The Project
The first thing needed to send a partial payment request is understanding the scope of the work. You need to discuss the activities as well as the specifics. This will help you determine the total hours of work needed and calculate an appropriate cost for the partial payment invoice.
Review And Confirm Payment Terms
The next step is to establish a percentage of the total amount for upfront payment. Typically, partial payments could range from 25% to 50%.
In addition, crosscheck and confirm the following payment terms with the client.
- What is the total cost for the project?
- What is the total upfront amount requested?
- What is the last date to pay the partial payment invoice?
- What is the final date of clear remaining dues?
- What are the payment methods accepted by your business?
Add The Upfront Amount Into The Contract
Once you have agreed on the terms, insert the partial payment invoice into the contract before sharing it with the client. To ensure efficacy when invoicing for small businesses, get the terms of the partial payment in writing. It then becomes capable of offering legal protection if the client fails to pay. Adding upfront terms also helps the client understand the payment terms correctly.
Attach The Invoice When Sending The Contract
Another way to get paid quickly is sending the invoice along with the contract document. Delivering your partial payment invoice will speed up the payment processes so that you can get started immediately.
Start Working Once You Receive Payment
Begin your tasks as soon as you receive the payment from the client. Once you are finished with the work, freelancers and other business owners can send the balance invoice with the last submission.
What Are The Advantages Of Upfront Invoice Payments?
From peace of mind to cash flow generation, partial invoicing payments deliver many benefits.
Finances For Unexpected Expenses
Most projects require raw materials and supplies to start working. Others need funds based on unpredictable events that accompany work. Sellers receive funds needed to get the work done and meet unforeseen costs with an upfront invoice.
Increase Your Cash Flow
By requesting partial payment upfront, businesses can cover business expenses and amenities while working on the project. A partial upfront invoice is vital for projects that take a long time to complete.
Higher Probability Payment
While getting paid upfront does not translate to any guarantee, it provides a sense of security. Moreover, the reassurance of getting paid is higher when paid partially upfront. This is based on the probability that if a client can handle partial payment without any red flags, you are more likely to get paid upon completion too.
How To Use Partial Payment To Collect Overdue Invoices
The best way to use partial payment is to collect payments from past clients who failed to pay on time. Check out the four ways you can use a partial payment invoice to collect unpaid invoices.
Personalize An Installment Option
Discuss dividing the total payment into smaller installments so that it is manageable for the client. Once both parties agree to an installment plan, the next step is to put it into writing. After signing the installment agreement, you have a legally binding contract.
The next step outlines the exact dates for payment. For example, your client has to pay $500 and you have agreed on five bi-weekly payments. In such a case, you need to spell out the due dates within the contract.
Discuss Interest Rates
When you offer an installment plan, it is wise to talk about interest rates for invoices paid after the due date. While the typical interest rate is 1.5% of the invoice amount per month, you can set your own rates.
Once the partial payment invoice is delivered, it might take a few days for clients to get acquainted with the process. You can resolve their hassles by sending regular reminders before the due date and after the date. Following up via email or phone is also advisable when the client misses multiple due dates.
By paying upfront, your client is securing your interests and services. To ensure payment is processed quickly, generate a partial payment invoice request following the steps outlined above.