Accepting partial payment of invoices can benefit Freelancers and small businesses, both when the partial payment is requested up front and when it’s used as a tactic to collect on past due invoices. Generally, businesses collect partial payment upfront for fixed cost jobs when they know exactly what they’ll charge when the contract is completed.
Partial payment refers to a payment made toward an invoice that is less than the total amount due. You can request partial payment before you sign a contract with a new client, or you can offer partial payment in installments to clients struggling to pay their overdue invoices.
In this article we will show you how to setup partial payments in VatPay. With VatPay you can setup partial payments and even extend Invoice Due Date automatically once a payment is made. You will also be able to dictate the minimum amount of partial payment you are will to accept.
Give your customers the option to make minimum partial payments, or to choose their own payment amount.
You can even automatically extend the invoice due date after the minimum payment is paid.
Why do customers make partial payments?
In some cases you might need to create an invoice where part of the total amount needs to be paid in advance just like a deposit. Cases like this are typical for businesses that provide services, where part of the final amount due will be required in advance as a sort of guarantee for completion of the payment.
If you are working in construction, you are probably already familiar with partial payments. An ongoing working progress under a contract can be hard to estimate the final cost, since their might be some extra overhead expenses or problems which might incur. Therefore it is common that the customer is invoiced and will make partial payments until the job is fully completed.
Partial payments simply allow your customers to pay part of the total amount owed in installments as long as the total amount is paid before the required date.
How to setup partial payments for an invoice in VatPay?
VatPay invoicing software helps you easily create and keep track of your partial payments, and match each payment to the corresponding invoice.
To setup partial payments in VatPay;
-
Login to your VatPay Account or Sign up for VatPay for free.
-
You can either create a new Invoice or edit an existing invoice to include partial payments.
-
Assuming you are creating a new invoice, Click on the 'Invoices' tab from the left menu and click the 'Create New Invoice' on the top right corner from the invoices page.
-
- Enter Invoice Details. You can click here to watch a quick walkthrough video on how to create new invoice in VatPay.
- From the invoice preference panel click 'Partial Payments' toggle button to open the partial payments settings. As you can see from the screenshot below, you can define the minimum amount you can allow your customer to pay as well as due date extension.
-
-
Specify the minimum amount you are willing to accept for partial payment. This step is required. If your customers try to pay an amount that is less than the specified minimum payment amount, they will get the following message:
-
-
Once you are done updating your Partial Payments Settings, either approve or save your invoice as draft. We will expand on the difference between an approved invoice and an invoice in draft mode later.
- Finally send the invoice to your client. Once they load the invoice on the browser, they will see the partial payment option as shown above.
You can always setup installment plans with partial payments in VatPay.
Once your installment plan takes effect, consider sending more frequent invoice reminders than you would under normal invoicing circumstances. Instead of sending reminders only once the installment invoice is past due, you may want to send a reminder when a payment is coming due, since the client has already shown they’re unreliable with timely payments. Send a reminder a week before an installment is due, then the day before the payment is due.
Giving your customers the option to make partial payments can actually encourage them to make purchases, since they will not need to make the full payment all at once. This could lead to an increase in your sales, and could make many of your customers happy by giving them an easy payment option.
