If you have an invoice template, it might be tempting to include your payment terms and conditions template as a part of it too – but it’s important to keep your payment terms and invoice separate.
That might seem counterintuitive, as the invoice is a request for money, and your payment terms naturally govern how that money is paid to you, and when, and what happens if it’s late.
But in the vast majority of cases, the invoice is sent out after the work is completed – so if that is the first time your client sees your payment terms, they cannot be applied retrospectively.
To put it another way, your payment terms and invoice govern opposite ends of the work you carry out; payment Ts & Cs are an upfront promise to pay on time and in full for the agreed work, while the invoice typically represents a statement that the work is completed and payment is now due.
And if that sounds like an unnecessarily fine distinction, then the practical application is that, if a client fails to pay, you may be unable to recover the debt if you only sent out your payment Ts & Cs with the invoice.
By carrying out any work at all without terms agreed upfront, you leave yourself open to disputes and point-blank refusals to pay – particularly refusals to pay any penalties on overdue invoices and so on.
There is one final reason why your payment terms and invoice should be separate in the first instance, and that is simply because asking the customer to agree to your terms from the outset formalises the relationship and makes it much more businesslike.
Once it comes to invoicing time, you can then attach the terms again – but at this stage it should be as a reminder, not as the client’s first look at them.
Repetition in this way helps to hammer home the Ts & Cs, especially any rules you might want to highlight regarding late payment penalties, and this all builds into a much more persuasive reason for the customer to pay on time, and avoid facing any debt recovery action you may have promised to take.