How to Use a Payment Agreement with Your Business Clients
Your business undoubtedly knows the value of having good clients. Part of that is making sure they pay you, and on time. If you're entering into a payment agreement with any of your clients, you need to make sure that's being handled the right way. To make sure you're adding all the right information, consider a payment agreement template. That way, you can feel confident and so can your clients.Download Template
You don't want to end up with a payment agreement that's not binding, due to incorrect wording or a problem with the structure of the agreement. Anytime you act as the creditor, there are some laws that have to be followed for things like interest rates and other requirements. To reduce the risk of issues, a payment agreement template can help.
Table of Contents:
The most valuable idea behind a payment agreement is that it's binding. You want to be able to repossess the property or take the client to court if they don't pay you. The client should also know they're being treated fairly in the deal. In this article, we'll talk about:
- Important Clauses
- Best Practices
- Tips for Signing Securely
- Key Considerations
- More Resources
Important Clauses for Payment Agreements
Just like other types of binding contracts, a payment agreement needs to be worded correctly to be legal. If you create your own from scratch, you run the risk of ending up with a non-binding agreement. Don't let that happen to your business. Instead, use a payment agreement template that includes clauses such as:
- Parties -- Who your company is making the loan to needs to be spelled out clearly. It's a great way to be sure that the payment agreement is legally binding on the right person. If there's a co-signer, list them as well.
- Balance -- The total amount that's owed to your business by the client should be listed here, along with any specifics of that balance, what it's for, etc.
- Repayment -- The repayment terms matter. Whether it's a lump sun, monthly payments, or something else, make it clear. The interest rate and any other charges should be listed out, as well.
- Late Payments / Prepayments -- If there are penalties for late payments, or a prepayment penalty, make sure to put them in the contract or they won't be enforceable.
- Default -- The client should understand what happens if they default on the payments, and the payment agreement template should include that information.
You don't have to worry about making your own agreement with a client. When you use a payment agreement template, you'll have all the basics you need in one place.
Best Practices for Client Payment Agreements
By using a payment agreement template with your business' clients, you'll be showing your seriousness and professionalism. It's also just good business practice, because you want to be sure you can legally file for the money you're owed if the client defaults. To do that successfully, consider best practices such as:
- Clearly spelling out the amounts, dates, products, interest rates, and other specifics.
- Adding any details or information that make the payment agreement unique in any way.
- Creating an agreement that follows local laws, so you know that it will be binding on your client.
It's important for you to feel secure in allowing clients to make payment arrangements. A good payment agreement template can help you with that. You'll also reduce the risk of bad clients, because they'll recognize the binding nature of the agreement they're entering into. That can help you and your company with peace of mind.
Tips for Security in a Payment Agreement
One of the most important considerations with a payment agreement is that it's sent and signed securely. That way you and your client knows it's properly handled. To do that as easily as possible, you can use Nitro Sign for all your important documents, including payment agreements. Signing online is easy and safe.
Key Considerations for Payment Agreements
There are key considerations for a payment agreement template, including:
- Making sure all the details of payment agreement are clear.
- Using a template that offers clauses that will be binding on your client.
- Choosing to offer fair terms that are also beneficial for your business.
A payment agreement template can reduce the stress or worry over allowing clients to repay on terms, instead of paying in full, up front.
Want to learn more? Here are resources to consider: