If you plan to give your invoices as collateral to a lender such as an invoice factoring company, you need to make sure that the invoice is satisfied in order to become an asset of the business. An incomplete invoice is just a piece of paper that has no value until the customer has accepted the delivery of services or products, and even then it is subject to the terms of the sales contract that may be mentioned in a supplier contract. Accountants and lawyers like in-depth discussions about invoices and purchase orders, as both documents contain numbers and legal implications. But there are many misconceptions about invoices that business owners need to understand before referring to their invoices as legal documents. The question of whether or not an invoice is a legal document is a question that always has people on several pages, but there really is only one right answer. Companies should formulate their invoices in a professional tone while using clear and simple language. It is important to always be polite when sending an invoice to a customer and in all other commercial communications related to payments. Make it easy for your customers to pay your bills so they have a better customer experience and you get paid faster. Add clear wording to your invoice that tells your customers the different payment methods they can use. If you accept cheques, include wording that covers all necessary details, such as: “Please make cheques payable to My Small Business and mail them to this business address. If you accept online payments, add a “Pay Now” button at the bottom of your invoice or in the body of your companion email that points directly to the online payment page to make it as easy as possible to find your customers.
Invoices are documents that allow small businesses to receive payments from their customers, but there are strategies for sending invoices that are more likely to get you paid quickly. The right message both in the invoice itself and in the accompanying email can motivate customers to pay the bill immediately. Here are some tips for communicating with customers about invoices: If your corporation is a limited liability company or LLP, your invoices must include the full name of the corporation as it appears on the Certificate of Incorporation and the Companies House registered number and address. If you include the name of an administrator/member on your invoice, you must include the names of all directors/members. Often, contractors are reluctant to use the right of suspension for fear of legal action by their clients due to the damage caused by the stoppage of work. However, this can be avoided if a clause is included in the contract stipulating that the contracting authority will compensate the contractor for damages resulting from the exercise of its right of suspension. It is important to track unpaid invoices as soon as they are late. The wording you use to track unpaid invoices should be polished but direct. Give your customer the benefit of the doubt: there`s a good chance that the late payment is due to a typo and they won`t maliciously withhold payment. To be considered legally valid, a contract must contain only two important elements, according to the Small Business Administration. These are the two conditions that must be met for a contract to function as a legal document: the seller has the continuing right to approve the buyer`s credit.
The seller may at any time demand advance payment, additional security or a guarantee of timely payment. If the Buyer refuses to provide the required payment, security or guarantee, the Seller may withdraw from the contract, refuse delivery of the undelivered goods and the Buyer shall be immediately liable to the Seller for the unpaid price of all goods delivered and for any damage as provided for in paragraph V below. Buyer agrees to pay Seller the costs of collecting overdue invoices, including reasonable attorneys` fees incurred by Seller to collect such amounts. The F.O.B. point is the SHIP TO point at the front. The low legal validity of an invoice is why suppliers need customer signatures or another binding form of acceptance before shipping a product. Accountability works both ways for a bill. Customers could order products and then deny that they had ever placed the order. For suppliers selling consumables, this practice could be extremely costly.
An invoice number is a unique number assigned to each newly created invoice. These numbers are used to track the invoices you send and are usually recorded in the company`s accounting system. The invoice number must be assigned in sequential order. You can even add customer messages to your invoices, thank your customers for their business, suggest additional services or products that may interest them, or add other relevant information. An invoice is not a separate legal document. Although invoicing is an important accounting practice for businesses, invoices are not a legally binding agreement between the company and its customer. This is because an invoice leaves too much room for manipulation to serve as a legal document. On the invoice itself, there is no evidence that both parties have agreed to their terms. To ensure that customers pay in full and on time, small businesses should enter into professional contracts that, unlike invoices, can serve as legally binding agreements. The following conditions should be checked with legal counsel before being sent to the printer for inclusion in contract documents used in the business environment. Buyers can read our proposed terms and conditions for orders included elsewhere on the Retainer website. The wording of an invoice should be as clear as possible.
Clearly indicate the due date of the invoice, the amount due and the services provided. If an invoice or associated email contains vague language, the customer may be confused, misinterpret the information, and as a result, send the payment late. SECTION 4.03. Billing and payment terms. (a) All amounts due under this Agreement will be invoiced and paid as follows: (i) each party will invoice the other party on a monthly basis (such invoice shall include a description of the services provided and appropriate documentation to justify the associated fees (including, where applicable, reasonable documentation relating to that party`s allocation of costs and third party costs with respect to such fees); This invoice and documentation must be at the same level of detail and in accordance with the billing procedures provided to the supplier`s other companies) for all services provided or caused by that party during the preceding month, (ii) each such invoice will be payable within 30 days of the invoice date, and (iii) payment of all invoices relating to services provided under this Agreement shall be made in Dollars. Always be concise and precise when formulating your invoices. Clearly state the information customers need to pay you according to your terms: indicate the amount due and due date. Sometimes companies try to use fancy terms when writing invoices, but this can confuse customers.
For example, instead of using vague wording on invoices such as “payment due on receipt”, simply specify the due date, i.e. “payment due on December 31, 2018”. Keep in mind that if your business is VAT registered, HMRC says you must state the unit price on your invoices. Most companies also have a lot of legalese on their invoices that outlines the company`s collection policies as well as the phone numbers that a customer can use to contact the company in order to make payment arrangements. The invoice also includes any acceptable payment options that the customer must choose. Always be polite when formulating invoices and related communications such as emails. Polite communication helps you maintain strong professional relationships with your customers, which increases your chances of loyalty. Courtesy in your bills also helps you get paid faster, according to a study by FreshBooks. The study found that using words like “please” and “thank you” when writing invoices can increase the percentage of paid invoices by more than five percent.
