As we always say, it’s important to agree any specific terms and conditions upfront – you can’t just put new payment terms on an invoice and assume that they will immediately become legally binding. But assuming you set out your terms and conditions from the outset, then it is a perfectly good idea to includeRead More
As we always say, it’s important to agree any specific terms and conditions upfront – you can’t just put new payment terms on an invoice and assume that they will immediately become legally binding.
But assuming you set out your terms and conditions from the outset, then it is a perfectly good idea to include the most important of those payment terms on an invoice when you send it out to the customer.
However, this raises the reasonable question of where your payment terms should go – after all, there is a wealth of other information that must be displayed clearly on the invoice too.
The full list depends on exactly what type of business you run, for example whether you are a sole trader, or whether you are VAT registered.
In general though, an invoice should include:
- the word ‘invoice’ displayed clearly
- a unique invoice number
- your company name, address and contact details
- your own name and trading name (if you are a sole trader)
- an address where legal documents can be delivered to you (if you are a sole trader)
- the name and address of the company you are invoicing
- the date the goods or services were supplied
- a description of the goods or services
- the date the invoice was issued
- how much is owed
- VAT (if applicable)
- the total amount to be paid
Here is where you can start including your own payment terms on an invoice, and the first and most important way of doing this should be clear if you read the above list closely.
A notable absence is any mention of the invoice deadline date, but it is obviously sensible to state this clearly on the invoice.
By default, payment terms for most contracts are now 30 days, but you may have agreed otherwise, in which case including a different payment deadline is one of the most important ways of incorporating payment terms on an invoice.
Apart from this, you may have agreed other specific terms, such as payment upfront, or a discount for early payment.
If you are invoicing for payment upfront, then clearly this will affect the delivery dates and how fully you can describe the goods or services provided – so in case of disputes later, it might be wise to make sure these payment terms are made very clear on the invoice, to explain why any of the other details might be necessarily vague.
And if you are offering a prompt payment discount, it makes sense to include this close to the invoice total – ultimately this is where most people will look to find out how much they owe, so by getting the discounted amount into their line of sight, you have the best chance of them opting to pay earlier.