Make Your invoices As Legally Robust As Possible

Make Your invoices As Legally Robust As Possible

Whether you have an MBA from Harvard or you dropped out of high school to grow your successful small business, chances are no one ever taught you how to make your invoices as legally robust as possible. In our last post, we talked about the importance of including a payment due date, specifying specific interest and late payment penalties, and ensuring your customers’ names are written accurately. Today, we’ll provide a few more tips for your invoices that can help make collections and litigation faster and smoother.

First, you may want to include language requiring your customers to give you prompt notice as to any defective or damaged goods. For example, you could say:

All claims for defective or damaged goods must be reported by written notice within five days of receipt of the goods.

This can be very helpful in the event that a customer suspiciously starts claiming your goods were defective only after you’ve sued them to collect an unpaid balance. The inclusion of this language will support your position that the customer waived any claims as to defects or damage when they failed to notify you within the time required. Granted, when a customer is silent about defects until being sued, such a waiver argument can still be effective in court even if you don’t include explicit language on the invoice, but that said, including the language will strengthen your position in court exponentially.

Another helpful tip is to ensure that you always include any past due balance on every invoice you send to the customer. This will continue to put the customer on notice of the outstanding debt and extinguish any claim the customer might try to make later as to lack of awareness. And along those same lines, we advise that you should never stockpile invoices. Send each invoice as it becomes due and owing. If you sit on the invoices, don’t be surprised if the customer does not have the funds to pay all of them when you later send several simultaneously. Stockpiling invoices is of no benefit to either party.

Finally, as our last tip for today, don’t try to come up with your own creative “legalese” requirements or make unrealistic threats of penalties on your invoices, because they probably won’t be enforceable due to the general advantage in bargaining power a seller has over a purchaser. Stick to the advice you see here, and if you have a question about something else you think might be a good idea to include, you can always ask a qualified attorney.

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