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My friend Rose knows the right
way to invoice for your consulting gigs
If you're like most IT professionals, you probably do some consulting on the
side. An occasional consulting gig keeps our skills sharp and helps us put aside
a little extra vacation money.
Recently a friend told me he felt like he had been waiting forever for one of
his consulting clients to cut his check. "I completed the work in two
days," he said, "and it's been two months since I turned in the
invoice."
I said, "Did you specify 'terms' on the invoice?" "Uh,
nope." "There's your problem," I said.
Summary of this tip
Never submit an invoice without specifying the terms of payment.
If you don't include your terms, the corporate accounting department will assume
it's okay to pay on their terms—which could be as long as 90 days.
Put in simplest terms...
In my experience, if you don't specify the terms of payment you expect, the
company isn't going to be in any hurry to pay the invoice. And the bigger the
company, the longer they'll take to pay you.
To confirm my suspicions about how corporations treat invoices, I talked to my
friend Rose Booth, TechRepublic's accounting manager. Rose said, "If an
invoice doesn't specify terms, most accounting departments will 'pay at will.'
Although some companies try to pay invoices within 30 days, others will wait as
long as 60 or 90 days after the date of invoice."
According to Rose, there's no conspiracy to withhold money from vendors. It's
just the way things are done in most accounts payable departments. Here are some
tips to help you get paid in a timely manner.
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Put
the terms in your contract. If you're providing consulting
services under a written agreement, make sure that the contract isn't
silent on the subject of how you'll be paid. Your agreement should
specify how often you'll be submitting invoices and how soon after
invoice you expect your client to cut the check. |
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Ask
your contact person. If you're providing services based on a verbal
agreement and a handshake, ask your contact person how soon the company
pays an invoice after receipt. Be pleasant, but persist until you get an
answer. If the company policy is to pay invoices in 30 days no matter
what terms you request, at least you won't be waiting, wondering, and
worrying about the status of your check. |
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Put
the terms on the invoice. Whether or not you're under contract, make
sure you put the terms of payment on the invoice you submit. That way,
if you should have to use legal means to collect the money, you'll have
proof you requested payment within a certain period. Somewhere on the
invoice, include the word "TERMS," followed by the terms
you're requesting. |
Table A shows some of the most common terms of payment.
Table A: Here are some of the most commonly used terms
for requesting payment of an invoice.
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Include the penalty for late payment. Rose
recommended including with your terms of payment some mention of the
penalty for a late payment. Even though you may never enforce this
stipulation, it shows that you mean business. One common example of
such a notification is: "A 1.5% finance charge will be added to
all past due accounts."
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Say something nice. At the bottom of my invoices, I
always include the sentence, "Thank you for your business." It
never hurts to be nice.
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