As a freelancer or a service provider, you know how frustrating dealing with unpaid invoices can be. According to a survey by Freelancers Union, 71% of freelancers have experienced problems getting paid at some point in their careers, with an average of $6,000 in unpaid invoices annually. Freelancers increasingly turn to partial payment invoicing strategies to overcome unpaid invoices.
In this blog post, we’ll look into the concept of partial payments in invoicing—what they are, how freelancers can effectively utilize them, and when to implement this strategy. By understanding partial payments, freelancers can minimize the impact of unpaid invoices and maintain a healthier financial outlook. Let’s get started.
Table of Contents:
What is a Partial Payment Invoice?
A partial payment invoice allows freelancers to divide the total amount owed into smaller, manageable payments instead of requesting payment for the total amount at once. It’s a structured payment plan agreed upon by the freelancer and the client, specifying when each installment is due and how much should be paid each time. Here are some key points about Partial Payment Invoices:
- Payment Structure: Instead of a single payment, the invoice outlines a schedule for paying the total amount in parts, making it easier for clients to budget and for freelancers to manage cash flow.
- Flexibility: This method is flexible, especially for larger projects or ongoing services, as payments can be tied to project milestones or recurring billing cycles.
- Clear Terms: The invoice clearly states the payment plan terms, including deadlines and any penalties for late payments, ensuring clarity and mutual understanding.
Benefits of Using Partial Payment Invoices:
- Steady Cash Flow: By receiving payments incrementally, freelancers can maintain a steady income flow throughout the project rather than waiting for a lump sum payment.
- Risk Reduction: Dividing payments reduces the risk of non-payment for large amounts upfront, providing security and commitment from clients at each stage.
- Client Satisfaction: Offering partial payments can improve client satisfaction by accommodating their financial needs and making managing costs easier.
Invoice Payment Terms Example:
For instance, a graphic designer might invoice $800 for logo design services structured as follows:
- Initial Deposit: $400 (50% of total) due upon project commencement
- Second payment: $200 (25% of total) due upon initial design approval
- Final payment: $200 (25% of total) due upon final delivery of files
Notes: Payments are due within 15 days of invoice issuance. Overdue payments may be subject to a 5% late fee.
Here’s another example:
Website Development and Maintenance
Total amount: $2,000
Payment Terms:
- Initial payment: $1,000 (50% of total) due upon signing the contract
- Second payment: $500 (25% of total) due upon completion of frontend development
- Final payment: $500 (25% of total) due upon website launch and client approval
Notes: Payments are to be made within 30 days of invoice date. A delay in payment beyond this period may result in a suspension of project work until payment is received.
How to Send Partial Payment Invoices?
To send partial payment invoices, you can use invoicing tools or software like CheckYa that easily tracks invoice amounts, pending payments, and due dates. CheckYa, for instance, is a free-to-start invoicing platform that simplifies sending invoices to clients.
When creating your invoice, it’s crucial to clearly outline the terms for partial payments before starting any work. CheckYa offers automated reminders two days before invoices are due and supports various popular payment methods such as Apple Pay, Google Pay, credit cards, debit cards, ACH, and more, ensuring clients can make payments quickly and easily. Payments are deposited directly into your bank account upon completion.
Additionally, CheckYa provides flexibility with payment processing fees—you can either pass 100% of the fee to your clients or split it 50/50, allowing you to maximize your earnings.
Here’s a straightforward guide to creating an invoice with a partial payment request using CheckYa in three steps:
- Sign up and navigate to the Invoices section. Click on “Create Invoice.”
- In the invoice items, enter the billing address and customer details and clearly specify the purpose of the partial payment.
- Please choose your preferred option for managing transaction fees, review the invoice, and send it.
Your client will receive the invoice instantly, speeding up payments by up to three times. You can easily track the invoice status in the dashboard, monitor initial partial payments, and send subsequent invoices as milestones are met or the project is completed. Managing your invoicing process becomes straightforward and efficient with CheckYa.
Conclusion:
Using partial payment invoicing, especially with tools like CheckYa, can significantly improve cash flow and reduce unpaid invoices for freelancers. These tools simplify invoicing, offer flexible payment options, and ensure payments arrive promptly. Whether you’re a designer, developer, or writer, integrating partial payments helps maintain financial stability and strengthens client relationships by making payments transparent and manageable.
