Invoicing Help

[BrightBiz]

I had a meeting with a client this morning and because she was referred to me via a friend and is just starting out in her business, I have offered her a payment plan. My charge will be $1890 total, but the payment schedule we've agreed to is:

$250 now, another $200 in a month and then $120 base rate per month over the next 12 months. This would increase if she needs any further services.

So, my question is do I invoice her for the entire amount now, or break the invoices up so she's receiving an invoice for each payment? I am guessing I can possibly do this either way but feel the seperate invoices may be easier from an accounting perspective.

Thanks for your help

[KarenC]

If it was me I would put:
(Invoice total $1890)
Progressive invoice payment $250 ................. $250.00

Total due now $250.00

or something like that.

Then the next one,

(Invoice total $1890 minus payments made = $ x.00)
Progressive invoice payment $200 ..................$200.00
Total due now $200.00

[DebtCollector]

As debt collectors we have a lot of people making monthly/weekly payments to us.
Set a specific date you want to be paid on.
Set up an spread sheet, so you can keep track of his/her payments.
5 days before the monthly payment is due send a friendly email reminding him/her that payment is due on "X" date (doing this will also show you are on top of your account keeping).
If payment does not arrive on that "X" date phone him/her, but be friendly asking when him/her will make this payment.
Once the account is payed off, send an invoice. Stating that this account is now paid in full, and no further payments are required.
If they ask for monthly invoices, well you will have to send them. But being in small business you want to cut out as much book work as possible and spend more time on the actual running of your business instead of being snowed under with paperwork.

[beanydc]

What is your expectation of your legal entitlement. What do you want to collect if it all goes pearshaped. Is it a monthly fee for task, or is it an annual charge.
If it is an annual charge, you should bill in full, and set up in the invoice the agreed payment plans. I've also seen invoices where each installment is a separate line.
If it is a bit upfront, and a bit monthly, in which case I would suggest you bill the upfront bit in full, again detailing the payment plan, and then detail the monthly amounts.
Also, in NZ, those who are on invoice based GST are able to claim the invoiced amount regardless of the payment date.

Denise Maffey CA Kumeu NZ

[BrightBiz]

Thanks for your help Karen & Denise,

Denise - At the moment I am not registered for GST so don't have to include that in my invoices, Thinking about legal requirements was a good point. Not that I have any issue with this lady, but I guess you never know. In that light, making sure I've marked the full amount initially does make good sense.

The structure is that most of the work will be done up front and I've allowed her to make the payments split just for financial ease on her because I really wanted to help her out and she's just starting off so yes I would want to receive the full amount!

That being said, Karen I think your system will work well. At the moment I am just using the ATO's e-record, so I'll take a look at how I can set it up.

Sorry for sounding so daft (marketing is my strength not really accounting LOL) Would I issue one invoice and then refer back to that invoice number and simply update the details each time I send it out?


Thank god for this forum, it's taken a huge leap of faith to believe in myself to jump into business and it's great to be able to have flyingsolo to come for opinion and advice

[ray_223]

I generally have a simple contract with specific deliverables and a payment plan based on each deliverable. This contract must be signed before work commences.

I then create a new invoice as each stage comes due. e.g. with a description of "Stage 3 payment for website redevelopment".

Having specific deliverables written down and agreed on before work is also a huge benefit not to be undervalued!!!

My simple contract is just something search on the net for. If I was doing larger jobs I'd get legal advice but for my past small jobs has been acceptable.

good luck

[KarenC]

Further to what I said above ... yes, I would send a separate invoice each time like Ray suggested. Payable within 7 days.

Since making everything payable within 7 days or prior to work completed I have seen a big difference in cash flow and payments being prompt. 30 days never worked for me.

FYI I use MYOB Accounting and pay the upgrade each year which includes being able to call MYOB for help all year. I give my accountant a copy of my file at tax time.

You might also think of looking into PayPal www.paypal.com.au where your client can pay with their credit card - you pay a small fee per transaction to PayPal, but it's better to receive the immediate payment and you don't have merchant costs. You can send a PayPal invoice direct to your client by email. PayPal is like having another bank account.

[Adam Randall]

What I normally do is the following in these situations:

Invoice terms
Extended terms based on following agreement

First payment of $300 due - 1/1/2009
Second payment of $300 due - 1/2/2009
Third payment of $300 due - 1/3/2009
fourth payment of $300 due - 1/4/2009
Final payment of residue - 1/5/2009

total $1890

**Please note that if any of the due dates are missed, then the total amount comes due and must be paid immediately.

Then I just send out a Quickbooks report with what is remaining to be paid and what has already been paid.

[Invoicera.com]

On a personal front I would recommend you to send invoices seperately. That would help you to track your payments in a more efficient and effective manner. And I would also like to bring to your notice that since the client is not a regular one then it becomes imperative to decide on delay payments. make sure to add a clause that after the due date a certain grace period will be given and even then if the client fails to pay the amount that he/she would be entitled to pay a mutually agreed fine.

Invoice Billing Software Online Invoicing Management Software System

[@HeatherSmithAU]

I agree with what Adam has said -

**Please note that if any of the due dates are missed, then the total amount comes due and must be paid immediately.

I would also have the full amount listed in the first invoice, with the breakdown, as has been previously suggested.

In my article Invoicing: How to create a business invoice I included some tips on what to do if you are not registered for GST in your invoice.