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Set Up Payment Terms in Quickbooks

Set Up Payment Terms in Quickbooks

Small business owners spend more than 5 hours per pay period alone processing payroll. When you factor in researching benefits providers, 401k management, and keeping up with changing employer taxes, we’re talking about a lot of time spent elsewhere. You have a lot on your plate as a small business owner. Switching to a payroll service gives you more time to invest in yourself and your business. QuickBooks Payroll makes payroll processing simple and intuitive. Continue reading to find out why it’s one of our favorite payroll software for small businesses.

Payment terms specify how, when, and how your customers or clients will pay your company. Invoice payments are commonly associated with payment terms. They are an agreement that specifies your payment expectations, such as when the client must pay you and the penalties for late payments. Transparent payment terms can help you get paid and make your billing process easier for your customers to understand.

Invoicing payment terms typically include the following components:

  • Bill date
  • The total amount owed on all invoices
  • The due date and time frame within which your client must pay the total amount owed
  • Requirements for a loan or deposit
  • Payment Plan Specifications
  • A list of payment methods accepted

There are a few other items you should include on your invoice. By including an invoice number, you and the customer will be able to track invoices chronologically. You should also include your contact information. If there are any disagreements, the customer knows who to contact, and the problem can be resolved quickly. You can also specify where the client should send a payment receipt.

Invoices with payment terms specify when your organization will be paid. Your invoicing system should provide strategic benefits to your business.

What are the benefits of payment terms?

Payment terms are important because knowing how much money will be deposited into your account and when it will be deposited is critical for accurate cash flow projections.

QuickBooks conducted research and discovered:

  • 80% of small business owners worry about cash flow.
  • Late customer payments are cited as the primary source of cash flow problems by more than half of small business owners.
  • 62% of small business owners are unaware of their monthly revenue.
  • Because they were concerned about cash flow, 58% of small business owners say they made a bad business decision.

Accurate cash flow projections assist you in tax planning, keeping your business running smoothly, and managing its growth. A clear, professional invoice can assist you in ensuring that clients pay on time. Clarifying payment terms ensures that you and your customers are on the same page before work begins.

How to use Payment terms?  

When negotiating a contract, payment terms are critical. Payment terms should maximize how quickly your clients pay you while minimizing customer inconvenience. Both parties should benefit from a good set of payment terms.

Remember that your payment terms should match your business goals as you begin to invoice customers. Choosing appropriate payment terms is a critical step in establishing and maintaining a healthy business. Include your payment terms on your invoices, but first discuss them with your clients.

Tips for establishing efficient payment terms:

1. Define your contract terms:

Before you start working, you must agree on payment terms with your customer. Work together to determine the best approach for both parties. Once you’ve reached an agreement, write down your terms in a contract.

Documenting your terms gives you legal standing if your customer does not pay on time. If you do not receive prompt payment and your customer ignores your past-due invoices, you may need to take legal action to recoup the funds. Because an invoice is not a legal document in and of itself, you will not have any legal standing if you do not have a contract in place.

2. Invoice on time for prompt payment:

Create and send an invoice as soon as you finish an order or provide a service. Delays can lead to late payments or cash flow disruptions. The underlying financial infrastructure for your company’s operations is cash flow. Receiving prompt payment from customers allows you to concentrate on the day-to-day operations and growth of your business.

You can create a professional invoice for your client using our free invoice generator. QuickBooks can assist you in streamlining your invoicing process to ensure timely payments.

What exactly is QuickBooks Payroll?

QuickBooks Payroll is a comprehensive payroll program that enables businesses to pay their employees, file taxes, and manage HR and benefits all from a single user-friendly platform. Whether you’re currently using another payroll provider or are just starting out, QuickBooks makes payroll simple and quick. An expert will review your payroll to ensure that everything is correct with the Payroll Premium plan. Alternatively, if you choose the Payroll Elite plan, an expert will set up or transfer your payroll for you.

Features of QuickBooks Payroll:

Payroll as a Full Service:

You don’t want to spend your time as a small business owner doing payroll instead of managing your company. QuickBooks computer, files, and pays your payroll taxes on your behalf. They make it simple to calculate and set up payroll deductions and garnishments, and you can generate simple reports for payroll history, PTO, and contractor information.

Payroll Automation:

You only need to set up payroll once with QuickBooks Payroll, and it will run automatically after that. Salaried or hourly employees with default hours on direct deposit can be paid automatically, and you can review and approve everything before payment is sent. They also make it simple to modify or add commissions/bonuses.

Quick Direct Deposit:

Nobody wants to sit around waiting for their paycheck. You can submit payroll as late as 5 p.m. the day before payday with QuickBooks Payroll Core Plan, and employees will receive it the next day. Funds will not be withdrawn until your employees are paid. Employees will receive their paychecks the same day if they submit payroll as late as 7 a.m. on the morning of payday under the Premium and Elite plans.

Expert Advice and Product Support:

If numbers aren’t your thing, your QuickBooks Payroll subscription includes expert assistance. Payroll support experts are available by phone and chat for troubleshooting and assistance. For those on the Premium plan, an expert will review your payroll to ensure everything is correct. If you prefer a more hands-off approach, an expert will set up or transfer your payroll from another payroll provider with the Elite plan.

Tax Penalty Defense:

We are all aware that taxes can be complicated, particularly when it comes to payroll. If you receive an IRS penalty, the Payroll Elite plan will reimburse you up to $25,000 in tax penalties. You will also be assisted by the Tax Resolution team in resolving any payroll or tax issues with the IRS.

Team Advantages:

QuickBooks Payroll facilitates health and 401k benefits for your team members in addition to payroll management. You can compare plans and get instant quotes to find the best medical, dental, and vision coverage for your employees and yourself. Guideline provides 401K administration, with experts handling contributions, compliance, and records at no extra charge. Premium and Elite plan holders can also compare workers compensation plans and pricing.

How Do I Change the Payment Terms on Invoices in QuickBooks Online?

Invoice payment terms are an agreement between you and your customers about when to pay invoices. The term “net” refers to the number of days until the anticipated payment. Change your payment terms to reflect the pace of your business, industry, and customer relationship. Even small details, such as net payment terms, set the tone for all parties involved.

Why should I change the terms of my invoice payments?

As a business owner, you must strike a balance between getting paid on time and offering reasonable payment terms to customers. Consider the long and short game. Receiving payment now means having money in your pocket.

Consider shorter payment terms if you have many customers with relatively low-cost invoices. If you frequently send high-cost invoices or know your customers have trouble making payments before the end of the month, choose “Net 45” (or higher) to give them plenty of time to settle their outstanding balances.

Consider the payment methods that you want to be available. Ask your customers if you don’t know which method they prefer. Again, the economics should not be taken at face value. If they prefer the convenience of credit cards, the upfront service fees your company pays can be justified by happy customers.

Begin by modifying the Invoice Payment Terms:

Depending on which segment of customers you want to apply Invoice Payment Terms to, there are a few options.

Case 1: Make the following the default payment terms for all customer invoices:

  • We recommend establishing default payment terms and adjusting for exceptional circumstances. You can use your default as a “benchmark” and experiment with different due dates for different customer segments to see which works best.
  • Click the Gear Icon (Gear Icon.jpg) on any page and select Accounts and Settings (or Company Settings).
  • On the left, click the “Sales” tab, and then the pencil icon (Pencil.png) for “Sales form content.”
  • When you make a choice, your “preferred invoice terms” are automatically applied to all future invoices (not retroactively).
  • Remember to click “save” in the box below before clicking “done.”

Case 2: Establish payment terms for specific invoices:

The simplest way to change invoice payment terms is directly on the invoice form. This only applies changes to this specific invoice; to change the default, you must go into settings.

How to Set up Payment Terms in QuickBooks?

Payment terms define how long you give your customers to pay for your goods or services. They assist your customers in budgeting their payments so that you are paid on time. Here’s how you can create and manage payment terms.

Create and implement payment terms:

Step 1: Establish payment conditions

  • You can specify multiple payment terms for your invoices and customers.
  • Navigate to Settings and then Configuration.
  • Choose New Payment Term from the Payment Terms menu.
  • In the Name field, type in the name of your payment term.

Here are some name suggestions:

  1. NET0 – Payment is due right away.
  2. NET7 – Payment is due within 7 days of the invoice date.
  3. NET14 – Payment is due 14 days after the invoice is issued.
  4. NET30 – Payment is due 30 days after the invoice is issued.
  5. EOM – By the end of the month, the payment is due.
  • Enter the number of days before the payment is due in the Due in Days field.
  • Select the from dropdown, then the payment start date.
  • To make this payment term the default, check the Default Payment Term box.
  • Choose Create.

Set a customer’s default payment term:

If you want to set a specific payment term for a customer, here’s how:

  • Select Companies from the Relationships menu.
  • Choose the customer for whom you want to set a payment term.
  • Choose Edit, then navigate to the Default Settings section.
  • Choose the payment term you want to use from the Default Payment Term dropdown.

Step 2: In your invoices, include a payment term:

QuickBooks uses the default payment term when you create an invoice. If the customer in the invoice has a payment term set, QuickBooks will use that instead.

Manage payment terms:

To re-use old payment terms, edit them. You can delete them if you no longer require them.

Steps to Edit a payment term:

  • Navigate to Settings, then Configuration.
  • Choose the Payment Terms tab.
  • Choose the payment term you want to change.
  • Make the necessary changes, then click Save.

Steps to Delete a payment term:

  • Navigate to Settings, then Configuration.
  • Choose the Payment Terms tab.
  • Choose the payment term you want to remove.
  • Choose Delete, then OK.

Note: If you delete the default payment term, QuickBooks will not replace it. You must create a new one.


Setting up an invoicing process with specific payment terms is a critical step in business accounting. Payment terms prioritize your payments and establish expectations for your customers, making client relationships feel more professional and productive. If you continue to have problems, please contact our team, which is available 24 hours a day, seven days a week.


1. How do I establish a payment schedule?

Enter a name for the payment term, then choose one of the options: Standard – If you want a payment to be due within a certain number of days of the invoice date. As an example: Your invoices are due within 25 days of receipt, and you offer a 1% discount to customers who pay within 10 days.

2. Can I use QuickBooks Online (QBO) to set up multiple payment terms?

This option, however, is not available in QuickBooks Online (QBO). There is no specific time frame for when this feature will be added at this time. On the Lists page, we can only set up multiple payment terms. Then, for each invoice transaction, use one term.

3. How do I modify a QuickBooks invoice term?

Select Sales from the left menu, followed by Invoices. Locate and open the invoice. Choose another term, then save. Reopen the invoice and select the term you just updated. Save and close the window. If customers fail to pay on time, QuickBooks allows you to charge late fees.

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