When selling to businesses, you need to establish an order policy that you and your customer can easily live with. Unlike consumer sales, where the person buying pays the bill, in business the person who purchases is not usually the one who pays your invoice. It’s usually sent to the accounts payable department, which makes sure that someone with authority has approved it. The faster you get the approved invoice to the accounting department, the faster you’ll get paid.
At our company, we send the invoice to the person who ordered so that person can approve it and pass it on to the accounting department. We always try to invoice the customer the same day the order ships, and we send invoices totaling more than $1,000 by Priority Mail. But an even faster way is to send them via email. And there is no rule that says you can’t send an invoice even before the order is finished and shipped; we do this often when our cash flow is slow.
The unwritten policy in business is to allow 30 days for payment, but we put Net 20 as our terms. Some companies will adhere to the terms you put down or even pay sooner. Others will ignore your terms and pay in 30 to 35 days, which is accepted without argument as standard business practice.
When taking an order, we always require a signed quote with specs and prices we have given them, or we require them to submit a signed purchase order with a number on it. You need something on paper with a signature to prove that you received the order should the need arise. Your buyer may leave the company, or the company could be bought out while the order is in process, and you want to be sure you’ll be paid.
Also, for all first-time customers, we require a 50 percent deposit, which helps our cash flow and lessens the risk with a company that we don’t know well yet. The only exception is for large, well-known corporations that will likely balk at the request for a deposit. The risk that they won’t pay your invoice is low anyway, and you can easily check them out on the web.
Larger companies may also ask you for references, a W-9, or more information on your business for their records. They may ask for things such as your federal tax ID number and whether you are a small business or a minority-owned company. When you closely follow their procedures and yours, the order-taking and payment processes should go smoothly. And when the first order is finished, you’ll both have a track record you can refer back to for future
orders. After a few more orders, both you and your business customer will reach a comfort zone, which makes doing business much easier.