York If getting paid on time is a
problem for your business, is it time to review your invoices and
terms and conditions to ensure that they do not leave you open to
the risk of bad debt?
Invoices
To comply with the law and to
ensure that customers are not given reason to delay payment by
challenging your invoices, ensure they include all the essential
information relevant to your specific business.
All invoices should
contain:
- a unique identification number
- the invoice date
- a clear description of what is charged for
- the supply date
- the amount charged.
For limited companies, invoices
must contain the company’s full name, any business name along with
an address for service of legal documents. If including the
names of the company directors on the invoice then all directors’
names must appear.
For sole traders, invoices must
contain the name of the sole trader and any business name, together
with an address for the delivery of legal documentation.
For businesses registered for VAT,
then ensure all the details required by HM
Revenue & Customs are displayed.
Payment terms
Your standard terms and conditions
of trade should cover:
- payment terms
- delivery arrangements
- credit limits and periods
- your right to claim interest on late payment
- your right to claim debt recovery costs.
Under the Late Payment of
Commercial Debts (Interest) Act 1998 businesses are statutorily
entitled to charge interest on the late payment of debts – when the
agreed credit period has expired. If no credit period is
stipulated, then you may charge interest from 30 days after
delivery of the goods or provision of service or the date on which
the purchaser receives notice of the debt. You should
stipulate in your invoices and letters requesting payment that you
intend to exercise these statutory rights.
Standard terms allow you to proceed
with greater speed and certainty against late and non-payers
because you will be clear about the contractual terms on which you
can proceed. Note that the terms must be incorporated into a sale
by presenting them to the customer before the sale is
concluded. A common error is for standard terms to be printed
on the back of an invoice which is presented to the customer after
the sale.
Ask us to check your invoices and
terms and conditions to see whether they are fit for purpose.
We can also assist with drafting appropriate standard terms and we
can explain, in practical terms, how to be sure that the terms and
conditions are incorporated into the sale to make sure that your
customer is bound by them.
Published: September 2011
Contact us:
For further advice on other company
or commercial issues please contact a member of our company and
commercial team.