10 Tips to Collect Payments from Customer

Avoid miscommunication and disputes by following the steps below in collecting payments from clients. You can collect money from clients through credit and debit card payments, modern payment methods, contact-free payment, and an upfront payment process.

Here’s how you can collect payments from clients:

1. Set Clear Payment Terms in Advance

As a business owner, you will receive payments on time when you and your client have set clear expectations. No surprising items or price hikes. Before finalizing the project with the client, make sure there is no confusion about the payment terms.

In your payment terms, you must include the due date, payment methods, late fees, deposit requirements, and milestone payments (if applicable) to avoid any issues in processing the payment.

Best Practices:

• • Prepare an agreement or contract before work begins.
  • Include payment terms in your scope of work document, invoice, and onboarding documents.
    Clearly communicate with the client and explain your terms.
  • Establishing payment terms early protects your business legally, and clients will be assured that you run a professional business.

2. Send Invoices On Time

Sending an invoice on time is as important as completing the project. When you delay generating the invoice, the payment will also be delayed. The earlier you send an invoice to the client, the sooner you will get the payment. This is the major reason why you should always send invoices on time.

What to include in the invoice:

• • Your business name and contact info
  • The client’s name and address
  • Invoice number (for easy tracking)
  • Issue date and due date
  • Itemized list of services/products provided
  • Total amount due
  • Accepted payment methods and instructions

Consider investing in invoicing software to generate invoices and send them instantly. These tools come with automated solutions that help you stay organized.

3. Use Professional Invoicing Software

If you create invoices manually, it may work initially, but for a growing or larger business, manual invoices are not the way. It often leads to errors, and tracking remains a concern.

What to do then?

You can look into investing in professional invoicing software to ease your billing process.

Here are the benefits of using invoicing software:

• • Quick invoice creation: Auto-fill client info, descriptions, tax rates, etc.
  • Automation: Set up recurring invoices and payment reminders automatically.
  • Tracking: View invoices that have been sent, viewed, paid, or are overdue at a glance.
  • Customization: Add branding, logos, custom fields, signature style, etc
  • Integration: Connect payment gateways and accounting software for seamless workflow.

Popular Tools:

• • Moon Invoice: A great tool that fits businesses of all sizes. It comes with invoicing, expense tracking, purchase orders, payment integration, and many more.
  • QuickBooks: Offers accounting software and is known for automation.
  • Zoho Invoice: Good for startups with strict budgets.

A professional online invoicing software reduces a lot of financial hassles. Plus, you save time, do less manual work, and keep your business more credible.

4. Provide Multiple Payment Options

While collecting payments, the more flexibility you provide to the client, the sooner you will get paid. Clients deal with different financial systems, and limited options could delay payments.

Here are the most common payment options you can offer:

• • Bank Transfer (ACH/NEFT/IMPS)
  • Credit/Debit Cards
  • UPI (for Indian clients)
  • PayPal or Stripe (for International Clients)
  • Digital Wallets (Apple Pay, Google Pay, etc.)
  • Buy Now, Pay Later (for higher-value services or products)

In the invoice, mention accepted payment options, and if possible, add clickable links or QR codes. Top invoicing software direct payment integrations that make the entire process contactless.

5. Send Friendly Payment Reminders

Even the most punctual and valuable client can forget a due date. So it is your duty to remind them by sending friendly reminders. It helps to collect payments without damaging the relationship.

Best examples of payment reminders:

I. Send a reminder 2 days before the due date.

Example: “Hi [Client Name], just a quick reminder that Invoice #101 is due on [Date]. Explore all your payment options now!”

II. Follow up on the due date with a professional tone.

Example: “We hope you are doing well! Today is your due date for Invoice #101. You can pay now.”

III. Send a firm yet polite message if payment becomes overdue.

Example: “This is a gentle reminder that Invoice #101 was due on [Date]. We are looking forward to receiving the payment. Please let us know if any issues are delaying the payment.”

6. Charge Late Fees (When Appropriate)

Up to this point, 50% of the business receives payments. However, sometimes, polite reminders aren’t enough to motivate action. It makes you wonder how to collect payment from customer if it is running overdue. In such cases, a late fee policy can help you collect money from clients.

How to Implement Late Fees Professionally:

1. 1. Define your late fee policy clearly in contracts, proposals, and invoices. For example, “A 5% monthly interest will be applied to overdue balances after 10 days past the due date.”
   2. Keep the policy in place for every client, and if you waive it, clearly indicate that it was an exception or a festive discount.
   3. Once the late fee is applied, send a polite reminder that the amount has been updated with the late fee. For example, “As per our agreement, a 5% late fee has been added to the outstanding amount due to the delay in payment.”

7. Offer Early Payment Discounts

Rewarding clients for paying early is one of the best ways to get your payments on time, plus it builds a good bond with the client. A slight discount can do wonders for your business.

Here’s how you can implement it:

• • In the invoice, mention a 2/10 net 30 payment terms to encourage your buyers to pay quickly in order to claim 2% discount if paid within 10 days.
  • While discounting the client, make sure your business can afford that 2% loss (not recommended for startups or recently launched businesses).
  • Mention the discount offer in the initial contract and payment terms.

Example:

Let’s assume the total invoice amount is $1,000. You could offer:

“Pay within 5 days and get a 2% discount — total due: $980”

The discount reduces your margin slightly, but it boosts your cash flow and reduces the time spent chasing payments.

8. Use Recurring Billing for Regular Clients

If you deal with clients on long-term projects where monthly billing is likely to be applied, you can select recurring billing. It ensures a consistent cash flow with minimal effort.

How to set it up:

• • Introduce an invoicing software that supports recurring payments. (e.g., Moon Invoice)
  • Set the due date frequency, i.e., weekly, monthly, quarterly, or yearly.
  • Enable auto-charging or auto-reminders as per the agreement and the client’s preferences.

9. Have a Written Contract or Agreement

A written contract is proof that every service you provide to the client is listed, noted, and any kind of unusual activity or policy violation could lead to bigger problems. Disputes are very common between a business and a client when no written contract or agreement is initially made.

So, here’s what you need to do:

• • Prepare the Scope of Work (SoW) document: Include a detailed list of services/products provided.
  • Add Timeline: Project duration, milestones, and delivery date.
  • Payment Terms: Total estimated cost (subject to change), due dates, and late fee policy.
  • Termination Clause: Include what happens if the project is cancelled midway.
  • Signatures: Both parties must sign the document prior to the commencement of the project.

10. Follow Up with Phone Calls or Personal Emails

Sometimes, even after reminders and late fee notices, a client still hasn’t paid. In such cases, a personal follow-up via phone or a direct email can be far more effective than automated messages.

Best practices:

• • Call with a calm, polite tone. Here, your goal is resolution, not confrontation.
  • Reiterate the outstanding balance and previous communications.
  • Offer support: “Is there anything I can do to help you resolve this?”
  • Summarize the discussion in a follow-up email for written records.

Example:

“Hi [Client Name], I just wanted to check in regarding Invoice #457, which is now [X] days overdue. I understand things can get busy, so I wanted to personally follow up and see if there’s anything holding up the payment.”

A quick call or personalized message often breaks through the noise and shows your client you’re serious about getting paid — professionally.

Best Payment Methods for Customers

Since your clients love to pay conveniently without stepping out of their home comfort, here are the noteworthy online payment methods you can offer to them.

1. Stripe

Stripe is one of the most convenient and internationally known payment methods. It is one of the most preferred payment methods among SMEs, large-scale businesses, and freelancers. Stripe is easy to set up and integrates seamlessly with invoicing tools. You can collect customer payments without much effort.

Best for: Freelancers, SaaS businesses, and service providers working with international clients.

2. Apple Pay

Apple Pay is one of the convenient online payment modes. It is a preferred choice for buyers, especially those using Apple devices. So, rolling out Apply Pay as the online payment option will not only be loved by many iPhone or iPad users, but also help you collect payment promptly.

Buyers can make the no-contact payment using their smartphone, as there is no need for physical cards or in-hand cash.

Best for: Freelancers or individuals using an Apple device for making online payments.

3. ACH Payments

ACH or Automated Clearing House transfers are one of the best alternatives to card payments, especially for US-based clients. ACH payments work like bank-to-bank transfers with comparatively lower fees than credit card processors.

Best for: Agencies, consultants, or service providers working with U.S. clients on retainer or large projects.

4. PayPal

PayPal has impressed many online buyers in recent times. They can simply use their mobile phones to send the payment online via PayPal. PayPal not only gives better accessibility but also enables multi-currency support, and smooth integration with other popular apps.

As a result, your bid to boost the payment collection can be fulfilled with PayPal. And, simultaneously, drive customer satisfaction that further fuels your business growth.

Best for: Agencies or service providers associated with small to large clients’ projects can introduce PayPal.

When Should You Take Legal Action?

Not receiving payments on time is one of the most frustrating things about running a business. In most cases, business owners avoid legal actions and attempt to collect payments with polite reminders. However, sometimes, things can get out of hand, and it becomes necessary to implement strict actions.

You can consider hiring a collection agency if the client follows the pattern below:

• • Ignoring payment reminders and final notice.
  • Ditching calls and no response to emails.
  • The payment is overdue for a long period (60+ days), despite the agreement.
  • The amount owed is large enough to justify legal costs.
  • Violation of the written contract or dispute in payments without any reason.

Collect Payments Faster with Moon Invoice

Automation always stays ahead of manual work when it comes to invoicing, and even to collect payment from customers. Moon Invoice, the invoicing software, is designed to simplify your payment process and speed up cash flow.

The software is designed to meet the needs of any business, whether SMEs, large-scale enterprises, or freelancers. It comprises 20+ payment integrations so that you can collect money on time and free yourself from chasing payments.

Besides online payments, you can oversee every financial operation with features like purchase orders, proforma invoices, expense management, time tracking, reporting, business reports, and more.

Here’s how Moon Invoice helps you get paid faster:

1. 1. Personalized Invoice Schedule: Track, personalize, and schedule invoices as per the client’s billing cycle.
   2. Payment Reminder Email Template: Set payment reminder email templates and collect overdue payments from clients with ease.
   3. Multiple Payment Gateways Built-In: Choose from a wide range of online payment gateways like Stripe, PayPal, Razorpay, Apple Pay, VISA, and more.
   4. Real-Time Payment Tracking: Check the status of your invoice — viewed, paid, or overdue with minimal effort.
   5. Recurring Billing for Repeat Clients: Set up recurring billing for a monthly subscription or a recurring billing model. Invoices will be sent to the client automatically.

Wrapping Up!

Collecting payments can become a frustrating job and sometimes stressful too. If you take a proactive, professional approach, you can gain clients’ trust and never have to chase payments.

That’s what Moon Invoice promises. You never need to deal with late payments or engage in continuous follow-ups. With Moon Invoice, you can offer the client’s most loved payment option and receive the money in no time.

Ultimately, what you get is ample time to focus on your business growth instead of racing to collect payments. Commence a 7-day Moon Invoice’s free trial and experience seamless payment collection now.

FAQs- How to collect payment from customer?