A paid-in-full invoice requires recipients of the bill to pay the entire balance upfront. The invoice contains no terms as the customer is not permitted to pay the invoice over a length of time, unlike standard invoices.

Table of Contents

• Pros & Cons of Requiring Full Payment
• Tips on Paying Upfront

Pros & Cons of Requiring Full Payment

Requiring customers to pay invoices in-full in comparison to paying in portions over a week, month, or another timeframe depends on the type of company and the goods/services they offer. In general, more expensive items or services are rarely excepted to be paid in full. Requiring so would most likely turn-off a large portion of a company’s customers. However, for smaller items or more affordable services, requiring payment in full is not unreasonable, and oftentimes expected. The following are pros and cons of requiring clients to pay invoices in full:

Pros

• Simplifies a company’s accounting
• Limits a company’s accounts receivables
• Increases likelihood of client’s paying on-time

Cons

• Can be unaffordable to clients
• No revenue from late fees and interest
• No means of rewarding customers for fast payment (ex: “2.5% 10, Net 30”)

Tips on Paying Upfront

The situations that garner requiring clients to pay in full can often be different than when a client should be required to pay upfront. Although the idea of requiring upfront payment may be tempting due to the comfort in knowing the client won’t have to be chased after the project is completed, it should be avoided in certain situations.

1.) The client is not new and has a good payment history – clients that have proven their trust over years of business should not be required to pay their invoices upfront. Requiring them to do so can cause them to feel like “any other customer,” and that their long-term business isn’t appreciated.

2.) The company is extremely well-known – companies that have proven themselves over countless years of being in business can almost always be trusted with paying a bill after-the-fact, as news of their inability to pay outstanding invoices would have made its way around the industry.

3.) Inexpensive services or products – cheaper items or projects should not be required to be paid upfront, as the risk to the provider/seller is minimal if the item goes unpaid. Note that this is different than requiring the client to pay the invoice in full, which is often expected for small invoices.

Overall, it’s important that a company/freelancer takes the time to work out their invoicing methods. Although it may feel like walking a tightrope at times, a happy medium can be found between turning off potential clients and ensuring the business is not overwhelmed with unpaid invoices.