When someone asks how to avoid legal trouble in their invoice, they are usually interested in only one thing: how to ensure they get paid for the work they provide.
If you are one of them, you are probably wondering if there is anything you can include in your invoice to make it more binding and make sure that you will get paid on time, because, after all, there is nothing worse than wasting valuable time chasing payments.
The simple answer is that, there a few things that you can do to make the invoice more ‘enforceable’:
- The Correct Billing Contact
From the moment you start the project, make sure you request the contact details of the person who is responsible for paying you. Depending on the size of your client’s company they may have an accounting department that handles their billing. It is much easier to deal with this individual directly, because this way you will be sure that the accounting received your invoice, and it might be easier to follow up on late payments with them directly.
- A Unique Identification Number in Each Invoice
Create some sort of numbering system for organizing and arranging your invoices. This could be a basic numbering framework that begins with 001 or it could be by date. This will enable you to keep your invoices organized for tax purposes. A good numbering system will also make things easier and a lot more professional, should you need to follow up with a client on a late invoice.
- Matching Invoice Terms and Contract Terms
When it comes to invoicing clients, you have to ensure that all the data information matches with the details written in your contract. For instance, if your contract says your terms are net 30, you can’t make a request to be paid upon receipt of your invoice. In case you’re not using a contract that includes payment terms, you’ll want to change that immediately.
- Specific Details Requested by Your Client
It is always better to ask your clients upfront if they have specific requirements for what information must be incorporated on an invoice. For example, some companies might require that your invoice includes your Tax ID Number, others may ask for a detailed rundown of the services you’re billing for. Few of them may indicate that invoices should be sent electronically or via snail mail. Keep in mind that not having the right information on your invoice might delay the payment.
- Date and Terms of Payment
Every invoice should include the date of issue and articulate the terms of payment. The exact terms you use are up to you and your client, but here are a few suggestions:
- Pay attention to the language you use for payment terms. Studies have shown that this has a great impact on the likelihood and time to get paid. Something like the following is optimal language: “Thank you – we really appreciate your business! Please send payment within 21 days of receiving this invoice.”
- Be clear and specific. Clients may not know what the term “Net30” implies, so writing “within 30 days” or even include the specific due date might be easier for everyone to understand.
- Avoid using “Due upon receipt” whenever possible. You might think this language will help you get paid faster, but not specifying an actual deadline can result in delayed payment since some clients may interpret it as “pay whenever you can.”
- Billable Services Specifics
Each invoice line should indicate the exact services that are being billed. Try to be as clear and thorough as possible. If the client is being charged a flat rate for services, use your judgment to determine the level of details needed to specify what they’ve received. If you are billing by the hour, make sure to specify the hourly rate, the number of hours billed and what they’ve received for that time.
Final Advice: Always Discuss Payment Terms Up Front
A proactive approach is always the ideal way to ensure your invoices will be paid on time. Talk about payment terms in early conversations with clients. A simple question like “My other clients pay me within 21 days of completing the project. Will that work for you?” might do the trick. If you notice any red flags in their reaction, trust your gut and move on.