Important Terms To Include On Invoices

Invoices are in a sense contracts that contain terms and conditions. Such information includes but is not limited to the conditions of the sale, the date, price, quantities, description of the products, terms of payment, and net thirty. Invoices can provide a variety of information and terms that can fit your desires. Signatures and responses are unnecessary with this type of contract thereby making it convenient as well as unilateral. As long as ordering, delivering, and acceptance of a merchantable product is accomplished, it can be said that both parties are in binding agreement.

So what is missing on this binding contract? There is a crucial aspect that many fail to incorporate on these invoices. Unfortunately, failure to pay as agreed is an issue numerous people encounter. For this reason, it is vital that you integrate a condition on your invoices that demonstrate the consequences that will arise as a result of this payment failure. If such a condition is absent, it can create a very expensive omission as well as disorder to your collection process. The following is an example of such a condition:

“Failure of payment within 30 days of bill date will result in a 1.5% additional charge monthly. In addition, customers are responsible for costs of collection including reasonable attorney fees incurred in the collection process.”

If collection is required, and such a statement is nonexistent, then costs of collection (including legal fees) may NOT be collected. The court of law will refuse enforcement of any repayments for these additional expenses. Collection agencies charge considerably high fees and the legal process can become very costly. In fact, many times the costs can be so prohibitive compared to the amount being collected that, if you are obliged to pay out of pocket, the use of collection agencies and lawyers would be highly unlikely. As you can see, an absence of this condition can turn out to be a very expensive error.

But, what if the invoice is large enough to warrant the collection process? Well, we know your main priority is to recover the costs. However, by merely adding such a statement, you can recover costs PLUS interest.

Numerous savvy business individuals will notice the absence of such language on an invoice and therefore take advantage of the situation. Adding this condition is simply another collection strategy. It will explain to your late paying customer that failure of payment will further force you to take part in an expensive collection and legal process. The condition will also disclose that in addition to the invoice charge and interest rate, the customer will be responsible for the costs of the process as well. Spell out every detail to make it binding on the purchaser. State the facts, or lose your money.

Other terms you may want to include can be return requirements and fees, restocking fees, shipping costs, or anything else deemed part of the deal by the seller. Your warranty or guaranty rules can be printed on the back of the invoice, or anywhere there is room. As long as the details and explanations are included, you are covered.

Do not send out another invoice without spelling out the most important terms of the deal.

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