A due date is the date by which something has to be paid, for example an invoice you’ve sent to your client.
When you send an invoice to your client, you set a due date for when they have to pay you. This can also be called a deadline.
Due date can also refer to the deadline by which you have to file and pay taxes, send in your financial statement or report consumption tax, such as VAT or GST. Make sure to follow these accounting deadlines, otherwise you could have to pay late fees, interest or fines.
What due date should I choose?
How long a due date you should set depends on several things, such as your relationship with clients, the standards of your industry and your cash flow requirements.
Due dates are part of your payment terms. Payment terms include all the information the client needs to pay you, such as available payment methods, how to mark the payment, and late fees and interest, if applicable.
Due dates are usually referred to as net 7, 14 and 30 days, and so on. Net 7 days is 7 days after the invoice was issued. Net 14 days is 14 days after the invoice was issued.
What happens if the client doesn’t pay on time?
If the client doesn’t pay on time, try reaching out to see if it was just a misunderstanding, or if they simply forgot to pay. If you use invoicing software, you can turn on automated payment reminders that are sent to your clients after the due date.
If the client still doesn’t pay, you can add late payment fees and interest, if you’ve included information about this in your contract or on the invoice. If you still don’t get paid, you can try outsourcing the invoice to a debt collection company. A debt collection company will try to collect the payment for you, in return for a small fee.