Do You Have a Standard Payment Policy?

Having a standard payment policy not only makes you appear more professional, it also makes it easier to manage your business and get paid. With a documented payment policy, you don’t have to come up with payment terms each time you do a project nor do you have to rely on your client’s payment terms.

I considered my own payment policy and looked at a few other business policies and came up with a few fundamental pieces of a good policy.

Rates

Are you charging by the word, page, hour, or project? In a generic payment policy, you can list out your by-word, by-page, and hourly rates so clients know what to expect. If you have a standard rate for certain types of projects, e.g. press releases or business memos, list those rates as well. Price ranges are acceptable.

Invoice Timing

Let clients know when they can expect to receive an invoice from you, e.g. at the end of the project, weekly, monthly, etc. For larger projects you might send invoices after a certain number of hours, words, or some other interval.

Payment Due Date & Penalties

Let your clients know upfront when you expect to be paid: 100% upfront, 50% upfront and 50% upon receipt of the final invoice, or 100% upon receipt of the final invoice. You might break up larger projects into other intervals, like 25% every week. But, specify how long after receiving the invoice the client should make payment. If you require prepayment, let the client know you won’t start working until you receive payment.

Define “larger projects,” at least for your own records, so you’ll know when to apply your long-term project pricing and invoicing terms.

Of course, clients don’t have forever to make payments and just because you say payment is due upon invoice receipt doesn’t mean clients will pay at that time. You might impose a penalty for late-payment clients, either a certain amount $10 per week after 3 weeks or a percentage of the invoice amount like 1.5%. Your state law may limit the amount of interest you can charge, so check with an accountant or contract attorney.

Payment Methods

Let clients know how they can pay you: cash, check, money order, Paypal, Western Union, bank transfer, etc. Remember that certain types of payments take longer than others and factor that into your payment policy. Electronic payments can be received in 1-2 business days. A mailed check or money order may take longer to receive and might affect payment due date.

Put it in Writing

Include your payment policy in new contracts, post it on your website, include it when you quote or accept a new project, and definitely include it on your invoice. Make sure you notify clients if you change your payment policy, for example, if you add a new payment method or you begin to require payments upfront.