Payment terms agreement templates are a great way for small businesses to know how to enforce their payment terms on customers of all sizes, without leaving any wriggle room for them to get out of paying.
Your payment terms agreement sets out not just your standard deadlines, but also the action you will take if payment is not made on time – including penalties and fees you might want to add on top of the original invoiced amount.
Without making all of this clear from the outset, you leave yourself on less of a firm footing if the customer disputes the total amount charged to them, and particularly if they refuse to pay penalties once they are added to that total.
Remember, a payment terms agreement template isn’t just something to find online and copy once for all your clients – you should draw up a template of your own, and then tweak it each time to create specific payment terms agreements for each client’s different circumstances.
What should a payment terms agreement template include?
There are certain common elements usually found in payment terms agreement templates, starting with a space at the top for the names of both parties – make sure this includes the company name, in case your individual contact leaves their job.
A paragraph outlining how much is owed, and how and when it will be paid, should come next – crucially, you should make very clear when the deadline for payment will be, even if it is simply 30 days from the date the invoice is issued or received.
Further clauses should follow, and these can vary depending on business type, and particularly on whether you work with businesses or consumers as customers, so it might be worth getting expert professional advice on these clauses.
End with a declaration that both parties have read and understood the terms, and a space for full name, contact details, date and signature (potentially an electronic signature if the terms will be signed via email).
As mentioned above, the precise terms will vary depending on your business type, and on the customer, so consult a professional if you’re still not sure what to include.