How to set payment terms, refund policies, handle complaints, and gather reviews

Payment terms

Receiving payment from customers is a critical part of your business. In Australia, payment terms are part of a sales contract, meaning they come under contract law. Your payment terms will show your customers the ways you let them pay you for goods or services, and when you expect to be paid.

Payment terms will usually include:

• The invoice date
• The due date
• The invoice number
• How much the invoice is for
• The currency you want to be paid in
• The payment methods you accept – cash, card, EFT, Afterpay etc
• Whether you provide credit and the terms of credit (eg no credit, 7 days, 14 days, 30 days end of month)
• Any debt collection policies – phoning/emailing, letter of demand, using debt collection services

Your payment terms will help you set expectations from the start, so you can avoid confusion later. Here are a few ways to use your payment terms to your advantage.

• Upfront payment – Depending on your business, you may want to ask for payment upfront. This is a great option for service providers who want to guarantee payment before they begin work. You can incentivise upfront payment by offering a discount. If you opt for an upfront payment discount, revisit your rates, and make sure you aren’t giving away all your profits.
• Deposit – If upfront payment isn’t appropriate, request a deposit before work commences. This is an absolute minimum in my books, unless you have an ongoing relationship with a client and have built trust, always ask for a deposit upfront.
• Retainers – If you have clients you work with in an ongoing capacity, you could set up a weekly/fortnightly/monthly retainer with them. This is an agreed amount to be paid to you each month in return for your work. Perfect to help you make your cash flow more consistent, though be sure you have a minimum notice period in place.
• Invoice terms – Your invoice terms can be any amount of time that will suit your arrangement, from COD (Cash on delivery) to 7 Days (invoice due 7 days from receipt), or longer. It all depends on the relationship you have with the client and your business’ cash flow needs.

Your payment terms should be displayed clearly on your quote, invoices, and sometimes on your website too.  

Refund policies

Returns and refunds are all part of doing business. Sometimes the way you handle a customer complaint can be what turns them into a loyal customer for life. Other customers will purposely order items from you in varying sizes or colours so they can try things on at home, pick their favourites and return the rest. Having a policy in place will save you time and money down the track. Your refund/return policy can also help you build trust with your customers, so it’s important your policy is clear, simple and easy to find.

Your refund/returns policy will include:

• What items can be returned
• What items can be exchanged
• What items are ‘final sale’ (ie not returnable/refundable)
• When things can be returned – 14, 30, 60 days after purchase date
• In what condition can items be returned – lightly worn, opened, tags still on, original condition etc
• What products can be returned for – store credit, full refund, refund less shipping, exchange only
• How to initiate a refund – email, form, online form etc
• Any exceptions to your refund policy – for example ‘sales items are final and cannot be returned or exchanged,’ ‘Returned items must have tags and be returned in original packaging’ or ‘Returned items must not have any visible signs of wear’
• How long it takes to receive a refund, replacement, exchange or store credit
• Any shipping fees
• Any restocking fees
• How you handle lost or damaged items
• Contact information if the customer has questions
• And if you are a service based business, how long (if at all) the customer has to request a refund. For example, this could apply to a coaching package where the client has 14 days from commencement to request a refund. It could also apply in the case of a rectification, if the work wasn’t up to standard even after you returned to fix issues.

Your policy should be displayed on your website, FAQ page, Product pages, on order notification emails, and on quotes and invoices.

Complaints handling procedures

A good Complaint Handling Procedure can save you a lot of time, energy, and potentially money. The idea is to resolve customer complaints quickly and manage your reputation in the process. Unfortunately, we don’t always get the opportunity to handle complaints because the customer won’t say anything directly to us, but they will tell everyone else! Your complaints handling procedure should reassure customers that you value their feedback and want to resolve the issue for them wherever possible.

Your complaints handling procedure will include

• Listening to the customer complaint – Thank them for bringing the issue to your attention, remain courteous, and you might apologise if it is appropriate (eg for the inconvenience)
• Record the details of the complaint – include dates, times, specifics. Go through the issue in detail so you can understand exactly what the problem is and what the customer wants/needs as a resolution. Keep records in one central place so you can identify trends or issues, and have the information at hand if you needed to go to mediation/court.
• Double check the facts – ask questions, repeat the answers to the customer, get clarification on anything you are unsure of
• Discuss options – detail the options available to your customer, include any timeframes, next steps and manage expectations.
• Resolve the complaint quickly but efficiently
• Communicate – keep in touch with the customer, let them know if there are any delays. Always under promise and over deliver.
• Follow up – after you have taken all steps to resolve the complaint, go back to the customer and make sure they’re satisfied, let them know what you’ll do in the future, thank them again for bringing the issue to your attention, and giving you the opportunity to resolve it for them.

Of course, there will always be someone who will not be satisfied regardless of what you say or do. Be firm in your boundaries, follow your procedure, and be logical with your decisions. In some cases it will be easier and more effective to simply refund your customer and move on, but it’s best to treat each complaint on a case-by-case basis.

Your complaints handling policy will include:

• How customers can lodge a complaint
• Detail the steps in your complaints procedures
• Indicate solutions you offer to resolve complaints
• Assurance you are committed to improving the customer experience

Display your complains policy on your website, FAQ’s pages, product pages, order notification emails, quotes, and invoices.

Gather reviews

The best piece of marketing you will ever have, is the word of your past customers. Whenever it is reasonable, ask your customers for a review/their feedback. There are a number of ways to gather reviews, and they include:

• Google – set up a Google My Business profile and encourage people to leave you reviews
• Facebook – set up a page for your business and encourage your customers to leave feedback
• Yelp, Trustpilot, Amazon, Tripadvisor, Capterra etc are all search engines where you can direct your happy customers to leave you positive reviews
• And dozens of options for software that will integrate with your CRM or email marketing system to automate the process for you.

The number one way to gather reviews from your happy customers is to ask for it. You can attach links to your email signatures, send automated emails to review product purchases, create QR codes for people to scan in store, and even use competitions to incentivise your customers. The point is to ask because mostly people won’t go out of their way to leave a review otherwise.

And finally, make sure you respond to your reviews wherever possible – both positive and negative reviews. It shows you care about your customer’s experience regardless of whether they’ve left you a glowing review or not.