Being a tradie is tough enough without having to chase up payments and deal with unclear terms that leave you hanging. That’s where clear invoice terms and conditions come in.
If you’re still leaving your invoicing to chance, it’s time to step it up.
Having solid, straightforward payment terms on your invoices not only protects your business but also saves you time, stress, and money in the long run.
Without proper terms, you risk dealing with late payments, disputes, and clients who don’t take your hard work seriously. And if you’re a solo tradie or working with a small team, you know how crucial cash flow is for keeping your business running smoothly.
So, why not make sure that your invoices clearly set expectations right from the start?
In this article, we’ll walk you through 10 essential invoice terms and conditions you need to protect your business and get paid on time, every time. Whether you’re a plumber, electrician, or any other kind of tradie, having these terms in place is a game-changer.
By the end of this guide, you’ll know exactly how to implement the top invoicing & payment terms for a successful business. You’ll also get practical examples of the commonly used payment terms on invoices that will help you avoid the headaches of non-payment and keep your cash flow flowing.
So, let’s get started and make your invoicing work as hard as you do!
1. Scope of Work
The Scope of Work outlines exactly what tasks and services were included in the job you had been hired to do. It defines the boundaries of the project, specifying what is and isn’t part of the agreement. By clearly stating the scope of work delivered, you prevent any confusion or disputes about the work being performed and ensure that both you and your client have a mutual understanding of the job’s expectations.
Here’s what to include in the scope of work:
- Description of Services: Clearly list the tasks and services you agreed to deliver.
- Exclusions: Outline what was not included in the job to avoid misunderstandings.
- Timeline: Specify the date you started and completed the project.
Example clause:
“This invoice covers the work as outlined in the quote and does not include additional services unless agreed upon in writing.”
2. Payment Due Date
One of the simplest, yet most important, things you can do on your invoice is set a clear payment due date. We all know that cash flow is king, and if clients aren’t paying on time, it can cause serious headaches. That’s why you need to be crystal clear about when the money is due, so there’s no room for confusion.
Having a set due date on your invoices doesn’t just help you get paid faster; it sets expectations from the get-go. Whether you’re working on a big renovation or a small job, your clients need to know when they’re expected to pay. No more waiting around, chasing people, or wondering when the money’s going to hit your account.
Here are a few common options for setting your payment due date:
- Due on receipt: Your payment is due as soon as the invoice is received. This is great for smaller jobs or when you’re dealing with regular clients.
- 14, 30, or 45 days: Many tradies go with 14 or 30 days after the invoice date. If you’re working on a longer project, 45 days might be more appropriate, but always make it clear.
- End of the month: For those who prefer a bit more structure, setting a payment due date for the end of the month is another option.
Example clause:
“Payment is due within 14 days from the invoice date unless otherwise agreed upon.”
3. Late Payment Fees
We’ve all been there: working hard, finishing the job, and then… waiting. And waiting. And waiting.
Late payments can be more than just an inconvenience; they can mess with your cash flow and leave you scrambling to cover your own bills. That’s why it’s crucial to have late payment fees clearly outlined in your invoices.
Late payment fees are a simple yet effective way to make sure your clients understand that paying late comes with consequences. You’ve done the work, and you deserve to be paid on time. By including a late fee in your terms, you’re setting the expectation that payment is a priority.
Here’s the deal: If you don’t set up a late fee, you might find clients taking their sweet time, knowing there are no consequences. Having this clear on your invoice will encourage clients to pay on time, or at the very least, motivate them to get their payments sorted faster.
What to include:
- Late Fee Percentage: It’s common to charge around 1-1.5% per month on overdue invoices. This helps to keep things fair and consistent across all jobs.
- Grace Period: Some tradies offer a short grace period (e.g., 3-5 days) before the fee kicks in. You can decide what works best for you.
- When the Fee Applies: Be clear about when the fee starts. Is it after 7 days? 14 days? Make it explicit so there’s no confusion.
Example clause:
“A late fee of 1.5% per month will apply to overdue invoices, starting 14 days after the due date.”
4. Payment Methods
In today’s world, clients want options. When it comes to paying their bills, the more flexible you are, the easier it is to get that money in your bank account. By offering a range of payment methods on your invoices, you’re giving clients the opportunity to pay in a way that suits them, making it more likely they’ll settle up quickly and without any hassle.
Tradies work hard, and you don’t want to make getting paid complicated.
Here are some popular payment methods to include:
- Bank Transfer: The classic. Most clients are comfortable with this, and it’s a secure, straightforward option.
- Credit Card/ Debit Card: If you can, offering card payments (through a payment gateway) is super convenient for clients who want to pay instantly.
- Online Payment Platforms: Services like PayPal, ZipPay, or Afterpay are great for clients who prefer these services.
- Cheque: Though not as common anymore, some clients still prefer paying via cheque, especially for larger amounts.
- Cash: For smaller jobs, some clients may still prefer paying cash. While this isn’t always the most efficient, it’s an option you might need to include.
Example clause:
“Payments can be made via bank transfer, credit card, or PayPal. Please refer to the bank details below.”
5. Deposits and Advance Payments
As a tradie, you’re probably familiar with the feeling of starting a big job, only to wonder if you’ll actually get paid at the end. That’s where deposits and advance payments come in. Requiring a deposit upfront not only secures your time and effort, but it also gives clients a reason to commit to the job and shows they’re serious.
Whether it’s a small job or a major renovation, asking for a deposit before you start work is a smart move. It helps you avoid getting stuck with materials and labour costs if a client backs out halfway through. Plus, it gives you peace of mind knowing that you’ve already got some of the money in the bank.
What to consider when setting deposit terms:
- Percentage of the Total Job: Typically, tradies will ask for a deposit of 20% to 50% of the total job cost. The larger the job, the bigger the deposit you can ask for.
- When It’s Due: Be clear about when the deposit is due, usually before work begins or upon signing the contract.
- Non-Refundable Deposits: In some cases, the deposit may be non-refundable if the client cancels after work has started, or in cases where you’ve already secured materials for the job.
Example clause:
“A deposit of 30% is required before work commences. The deposit is non-refundable if the job is cancelled after work has begun.”
6. Liability Disclaimer
A Liability Disclaimer limits your responsibility for certain risks that could arise during the job, such as accidental damage to property or personal injury. This clause helps protect you from financial loss in case something goes wrong that’s beyond your control or caused by factors outside your work.
What to include:
- Indirect or Consequential Damages: Ensure you’re not held responsible for damages that aren’t directly caused by your work, such as incidental costs or loss of business.
- Property Damage: Specify that you’re not liable for accidental damage to the client’s property, as long as it wasn’t caused by negligence.
- Injury or Loss: Clarify that you’re not liable for any injury to the client or others that happens during or after the job, unless it’s caused by your direct actions.
Example clause:
“The contractor is not liable for any indirect, incidental, or consequential damages that may arise from the performance of services, including damage to property or injury, unless caused by the contractor’s negligence.”
7. GST (Goods and Services Tax)
As a tradie in Australia, you know that GST (Goods and Services Tax) isn’t just an optional extra; it’s a legal requirement for most businesses. Including GST on your invoices ensures you’re compliant with the Australian Tax Office (ATO) regulations, and it also keeps things transparent between you and your clients.
GST is typically a 10% tax added to the total cost of goods and services you provide. It’s important to clearly state how GST is handled on your invoices, so there’s no confusion when it comes time for payment. Including GST in your terms will also help you avoid any tax-related issues down the line.
What to include when dealing with GST:
- Clearly State GST: Always show the GST amount separately on your invoice, so clients know how much they’re paying for tax. This keeps everything transparent and helps avoid any disputes.
- Include Your ABN: If you’re registered for GST, ensure your ABN (Australian Business Number) is on the invoice, as required by law.
- Itemise GST: Specify that the total price is inclusive of GST, or list it as exclusive of GST and then add the GST amount separately.
Example clause:
“GST of 10% is included in the total amount of this invoice. Our ABN is [insert your ABN here].”
8. Dispute Resolution Process
As a tradie, you know that not everything goes smoothly. Occasionally, a client might be unhappy with the work, or there could be a payment dispute. That’s why it’s essential to have a dispute resolution process outlined in your invoice terms. A clear process gives both you and your clients a path to resolve any issues quickly and without escalating things to a costly legal battle.
By including a dispute resolution clause, you’re showing that you’re proactive and professional. It sets the tone for handling any problems that might arise, ensuring that both parties know what to expect if a disagreement occurs.
What to include in a dispute resolution process:
- Timeframe for Raising Disputes: Specify how long the client has to raise any issues after receiving the invoice (e.g., 7 or 14 days).
- Steps for Resolution: Outline the steps both parties should take if a dispute arises, whether that’s through informal discussions, mediation, or arbitration.
- Legal Jurisdiction: If necessary, mention where any legal disputes would be handled (this is especially important if your client is based in a different state or region).
Example clause:
“Any disputes regarding this invoice must be raised within 7 days of receipt. Both parties agree to attempt to resolve any issues through mediation before pursuing legal action.”
9. Cancellation Terms
Anyone who’s worked in the trades knows that clients can change their minds at the last minute. A sudden cancellation can leave you out of pocket for time, materials, and labour already invested. That’s why cancellation terms are a must-have in your invoices. These terms protect you from losing money when clients back out unexpectedly, and they help you manage your schedule better.
By outlining clear cancellation terms in your invoice, you’re setting expectations with your clients about what happens if they decide to cancel the job after you’ve already started preparing or working on it.
What to include in cancellation terms:
- Notice Period: Specify how much notice a client needs to give before cancelling the job. This could be 24 hours, 48 hours, or even a week, depending on the job’s size.
- Cancellation Fee: Include a fee for last-minute cancellations to cover any costs incurred from planning or beginning the job.
- Conditions for Refund: If a deposit has been paid, clearly state if it’s refundable, partially refundable, or non-refundable.
Example clause:
“Cancellations must be made at least 48 hours before the scheduled start date. A cancellation fee of 20% of the total job cost will apply if the job is cancelled within this period.”
10. Refund Terms: Clarifying What Is Refundable
While most tradies work hard to deliver the best possible results, there might be situations where a client isn’t completely satisfied, or something doesn’t go as planned. That’s why it’s crucial to have refund terms in place. These terms outline under what conditions you’re willing to issue a refund and help manage client expectations.
Without clear refund terms, you could find yourself in a situation where a client demands money back after you’ve completed the work, even if there’s no valid reason. By defining what’s refundable (and what’s not), you protect your business from these kinds of disputes.
What to include in refund terms:
- Conditions for Refunds: Clearly specify under what conditions you will issue a refund (e.g., if there’s a defect in the work or if the job was incomplete).
- Non-Refundable Deposits: For jobs where you’ve already started work or purchased materials, make it clear that deposits are non-refundable.
- Timeframe for Refund Requests: Define how long the client has to request a refund after the work is completed.
Example clause:
“No refunds will be issued once work has commenced, except in cases of faulty workmanship. Non-refundable deposits apply for cancellations after work has started.”
Conclusion:
By setting clear payment due dates, late fees, and refund policies, you’ll avoid disputes and keep cash flow steady.
These invoicing terms not only protect your business but also set clear expectations with your clients. Take a moment to review your own terms and ensure they reflect your needs; doing so will save you time, stress, and money in the long run.
Implement these top invoicing & payment terms for a successful business, and you’ll keep things running smoothly, getting paid faster, and protecting your hard-earned cash.
Need help? i4T Business makes it easy to send detailed invoices with all your terms and conditions included, so you can focus on what matters most: getting the job done.
Try i4T Business today and streamline your invoicing process!
FAQs
The best payment terms for tradies include clear due dates, late payment fees, and deposit requirements. These terms ensure timely payments and protect your cash flow.
Late payment fees encourage clients to pay on time. They help ensure you don’t lose money due to delayed payments and maintain consistent cash flow.
Requiring a deposit secures your time and materials, ensuring that clients are committed to the job before you begin. It also helps cover any initial costs.
To avoid disputes, include a clear dispute resolution process in your invoices. This lets clients know how issues will be handled and provides a professional solution.
GST is a 10% tax added to the total amount of your invoice. It should be clearly stated on the invoice, either as exclusive or inclusive of GST, along with your ABN.
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