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10 Rules Of Writing Bullet-Proof Terms & Conditions On Your Invoices

Written by on December 07, 2014
10 tips on writing bullet-proof terms and conditions!
10 tips on writing bullet-proof terms and conditions!

Setting strong terms and conditions for your business is really important. Many entrepreneurs fail to make this a top priority and only realize their mistake once their cash flow gets disrupted. Starting up a business is not easy. There always seems to be a never ending list of tasks that require your attention and all seem to be equally important. All the hype is around your product, finding the right customers, reaching out to your market, etc. Amongst all these tasks it is quite easy for entrepreneurs to neglect giving enough time to writing terms and conditions for their invoices that can have a great impact on the businesses cash flow in the long run.

So here are the top 10 rules of writing bullet-proof terms and conditions on your invoices that will protect your business from late payments and problems in cash flow.

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1. Protecting your company

The fact here is very plain and simple. Failing to put in the right terms and conditions can seriously put your company in a lot of risk, uncertainty, and misunderstandings. This is why it is extremely important for you to put down in writing, the actual arrangement between the two parties involved in this transaction. You have to make sure you fully cover yourself so that your clients or customers do not have any chance of backing on their world.

If you don’t have anything in writing, then you simply have no proof. Your terms and conditions need to be robust and exhaustive enough to suffice as a strong proof/evidence if in future you need to take things to court.

2. Important points to include

According to experts, your terms and conditions should be like a recipe or manual that covers absolutely all areas and scenarios that can occur. You need to first clear state what the terms and conditions are between both parties that are involved in the transaction. But what’s more important that that is to also outline what happens when one party or the other is unable to meet the terms and conditions due to several different reasons. Again the different reasons might lead to different actions to be taken. Here again, you will need to be exhaustive enough to cover all these areas too.

3. Clearly defining the products and services provided

The first main thing to highlight in your terms and conditions on your invoice are the products and services that are exchanged. Different companies offer a portfolio of products and services. Thus each invoice and amount charged will be different. You need to clearly identify the products and/or services that your client/customer has purchased.

4. Highlighting the terms of payment

As a business you might not be able to accept all methods of payments. Lots of companies are able to take card payments but might not be able to accept a certain card like American Express card etc. If you, for some reason, are unable to accept, e.g. cheques, etc. then make sure you highlight this in your terms and conditions when sending out your invoice.

The second most important point to remember when highlighting your terms of payment is the deadline for clearing the invoice. Along with that you need to state what penalty or charge there will be in case of delays. This is the strongest way of protecting yourself against late payments and slackers.

5. Highlighting guarantees and warranties

Businesses selling products and services often have to offer warranties and guarantees to make the company look more legit and credible. If you are offering any guarantee or warranty, this is something that you need to mention in your terms and conditions. Touch areas like the circumstances in which the client/customer loses his/her warranty or guarantee and the circumstances in which they do apply.

6. Queries related to delivery times

If the invoice you are sending is for a product that will be delivered to the customer or client, you need to mention what the delivery time is. A standard delivery time will help you keep yourself safe from delays without giving the customer/client a chance to sue you for delays. Any other questions that can arise in relation to delivery of your products or services should also be highlighted in your terms and conditions.

7. Tackling points that are not always clear

Failing to mention certain terms can seriously affect your business and cash flow. Failing to do so automatically puts your customer or client in a higher position to enforce what they thought was the term and condition.  Sometimes not all areas of your business are clearly defined. There are always if and or scenarios that take place when the first course of action fails. If your client or customer is not made aware of these terms, you will have no option but to comply with what the other party decides to do. Thus it is strongly advised that you carefully go over all aspects of your business and make sure they are mentioned in your terms and conditions even when they not likely to occur that often.

8. Tackling points that do not apply to everyone

A business might have several different types of clients and customers. In this case there might be some terms and conditions that you have for one set of clients, and another set for another type of client. Here you might want to go ahead and draft two sets of terms and conditions and have two different invoice templates to use. However, if you want to keep things simple and have one solid set of terms and conditions, then it is important that you address all client/customer types and highlight what terms apply to them and what not to. Though this might mean ending up with a very lengthy terms and conditions, it shouldn’t be avoided.

9. Notice for terminating the contract

When running a business there are lots of unforeseen events that can happen. Due to countless reasons, your client or customer might need to terminate the contract and decide to exit out of the terms and conditions that bind him/her on an invoice. In this case you want to carefully contemplate what course of action is to be taken. In some cases you might want to still enforce the payment of the invoice if for example, the service is already provided and a return cannot be accepted. In other cases, you might want to relax this and accept the client or customer’s wish to terminate the contract. Whatever you choose to set as your rules of business, simply make sure it is highlighted clearly in the terms and conditions on your invoice.

10. Which law shall govern the contract

Depending on the industry that you work in, there will be different laws that apply to offering the products or services that you offer. Make sure you go over these laws extensively or even better, hire a professional lawyer who is expert in this field, and have them clearly highlighted to you. Once you are made aware of the legal aspects and laws of your business, you should make sure that the ones governing your contract and invoice are clearly mentioned in your terms and conditions.

Following these top 10 rules of writing bullet-proof terms and conditions for your invoice can bring a huge improvement to the cash flow of your company.

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