Pro Tip: Make Your Invoices Robust

Pro Tip: Make Your Invoices Robust

When running a business, especially a smaller business, one of the biggest unknown knowns is debt collection. While we like to believe that everyone in the business world will pay for goods purchased or services rendered, that is all too often not the case. Breach of contract and debt collection are among the largest practice areas in the world of civil litigation.


Every year, numerous small businesses go under simply because they were unable to collect on too many open invoices and accounts receivable, or couldn’t move quickly enough through litigation because they lacked sufficient documentation to support their claims.

To prevent a similar outcome for your business, there are some crucial tips to keep in mind that can protect you and make everything easier if or when you have to commence a lawsuit to recover unpaid balances.

Depending on the type of business you’re operating, you’ll either be dealing with contracts or relying on purchase orders and invoices. If you fall into the latter category, you want to make sure your invoices will serve as solid proof of your entitlement to payment. First, you should always include the date the invoiced balance is due. This may seem like common sense, but many invoices leave it out, and that makes it more difficult to determine when the default or non-payment occurred, and it also makes it difficult to determine the date when interest begins to accrue. Next, you should include language on the invoice in bold font that states that any past due balance will be charged monthly interest from the date of default. This is important because it signals that late payments have real and tangible consequences, and when you collect the interest, it can help defray other collection costs you’ll incur. You’ll also then be able to pursue the quoted interest in your lawsuit as part of your principal. One more tip for now: always include the correct name of the entity or customer on the invoice. Again, this may seem like common sense, but it’s important to stress, as this is one small mistake that can really slow things down in litigation.

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