When you send out a request for payment, it might seem like a good time to remind the customer of your terms and conditions – but where should you put your payment terms on invoices so that they cannot be missed?
First of all, a note of caution: You have very little chance of enforcing payment terms on invoices that were not agreed in advance.
This might seem unfair, but there are statutory rules on things like standard payment terms and the penalties that may be imposed for non-payment, and any terms and conditions you apply of your own need to overrule those that are written in law.
By the time you come to issue an invoice, you have usually already carried out the relevant work and, at the time you did so, those standard statutory terms applied.
Simply putting new payment terms on invoices doesn’t mean the customer is obliged to honour them when paying for work that has already been done – at best you are asking them for a favour by paying you under the new terms, and at worst the customer might raise a dispute and refuse to pay at all.
All of this means you should clearly issue your payment terms and conditions upfront when taking on a new customer, before any money changes hands, and before you carry out any of the work.
Assuming you have done this, then it is appropriate to also include the same payment terms on invoices issued to that customer, to serve as a reminder of their obligations under your existing mutual agreement, and also to serve almost as a threat of the action that you will take in the event of non-payment.
It’s sensible to include certain headline terms on the front of the invoice – for example, if payment is due within 30 days, state this clearly and provide a specific deadline for full payment.
Likewise, if your payment terms promise a discount for early payment, it’s worth making this very clear alongside the invoice total amount, so customers who might be swayed by such an offer can’t fail to see it.
Beyond these main terms and conditions, you might want to include a full or abridged version of the relevant terms on the back of the invoice – just like the small print you’ll usually see on the back of a tax or utility bill.
Again, you can set out the penalties that may be imposed for non-payment, the acceptable payment methods, and so on.
Finally, if you invoice electronically and have your full terms and conditions in PDF format, it’s almost effortless to attach them to your invoice emails, so the customer has a full copy of any pre-agreed terms, and cannot later argue that they were not aware of penalties, fees and interest on overdue invoices.