In business, a due date is the last day employers can make a payment on an invoice or debt before it’s considered late. A due date is written on invoices, loan payments, credit card payments, and so on. The payment due date states when payment is expected and can carry a variety of penalties if the date passes and no payment was received.
What happens when a payment due date passes?
Due dates aren’t meaningless. There are often specific rules about what happens when a due date passes without payment. Due dates can be specified by the client or seller. If a payment date passes, the payment is considered late and will result in consequences such as late fees.
Why is it important to include a due date in payroll processes?
One of the main reasons to include a due date for payroll or invoices is to establish trust with employees, abide by local laws, and encourage customers to pay on time. Typically, customers should send payment within 30 days of receiving an invoice.
It is possible to negotiate longer payment periods, but both parties should agree on the final date and it should be written on the invoice or specified in a contract.
What are some best practices for setting payment due dates?
When setting a due date, there are a few important things to consider:
- Avoid ambiguity when describing payment terms. Vague terms such as ‘end of the month’ can cause confusion. Instead, be specific: ‘Payment will be sent by or on the 10th of each month.
- Write out the due date in full using the day, month, and year.
- Plan in advance during busy seasons such as December. This busy time of the year can make it difficult to receive or chase payments.