Typical payment terms for consultants
When it comes to invoicing and outlining payment terms, many consultants are oblivious. They don't know what to do. If you're reading this, you're curious about how consultants are paid, or you want to learn the typical payment terms for consultants.
Establishing payment terms for a consultant is simple, but many consultants are unsure what should be included in their payment terms. The reality is that many professionals are underpaid because their payment terms for consulting services are not properly defined.
A good consultant payment term that will be clearly understood should include the cost, amount, delivery, payment medium, and expected payment date. And if you are new to the consultancy business, the question that comes to mind is; how do consultants get paid? Read on to find out.
Features of a typical consultant payment term
A good payment term for a consultant is incomplete unless it includes these essential elements:
1. Specific invoicing date
An actual invoicing data should always be included in a good consultant payment term. This will indicate the time and date when the consultant will invoice the client for the service rendered.
2. Clearly defined payment due date
This is another important element in a consultant payment term. This is the date on which your client is expected to pay for the service provided. If the client fails to pay by the due date, the consultant usually charges an additional fee.
3. Payment medium
It is also important to consider a payment medium when planning your payment term. This informs your client of the method you prefer to be paid by, allowing both of you to determine whether the client can pay through this medium or if you need to be more flexible.
4. Clause for late payments
This will clearly state the amount your client will add to the actual payment if they cannot pay by the due date stated in the payment term. Declaring this clearly on your payment terms will help avoid disputes or disagreements between the consultant and the client. It also promotes prompt payment because the client understands that he will pay additional money if he fails to pay by the due date.
5. Include working hours
In a typical consultancy service, customers are billed hourly. If you also operate on the same basis, you should have an efficient way to track every hour you spend working with a client and include this information in your payment terms for clarity.
Top 3 bookkeeping software with good consulting payment terms
With a plethora of online bookkeeping software that does the hard work for you in no time, invoicing has never been easier. Based on extensive research, we have compiled a list of the best bookkeeping software that you can use for invoicing. Some of them already include good consulting payment terms. They include;
Quickbooks: A good place for beginners to learn.
Workee: Offers myriads of easy-to-use services for professionals.
Xero: Connects to a third-party payroll provider.
QuickBooks Online is an accounting solution used by many small business accounting experts to carry out accounting operations; it provides support and allows beginners to learn from online training aids. It simplifies and rewards bookkeeping by allowing users to access various accounting features from the main dashboard. QuickBooks Online is popular among small businesses, tax professionals, and consultants. It makes bookkeeping easier and faster.
Workee is another excellent accounting software that helps consultants with bookkeeping and invoice production. What distinguishes Workee from other bookkeeping software is its ability to provide other needed services by professionals. Workee, in addition to expense tracking, has a feature that allows video calls, appointment scheduling with a calendar, tax payment, and much more. Workee has everything an online professional could want, and the software makes invoicing and setting payment terms a breeze. Workee provides a platform where consultants can work with clients online via video call, schedule lessons, and send billing for services rendered. Clients can make instant online payments securely.
Quick start: watch this video to learn how Workee's accounting software allows you to make invoices and set payment terms with just a few clicks.
Xero is a simple cloud-based business management solution used by micro-businesses. It has a simple interface and is completely integrated with a third-party payroll service. Integration with Stripe and GoCardless enables businesses to accept online payments from customers. Xero enables online professionals like consultants to send custom invoices. It helps with bank transaction settlement and receipt capture to aid in record-keeping and inventory tracking.
If you are a professional consultant or an online business owner, consider implementing an effective finance management solution for your company that includes various other crucial features. In that case, Workee is unquestionably the best option for you, as it makes invoicing extremely simple while also providing additional features that an online professional will require.
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