Close this search box.
Blog » Business Tips » The Top 10 Rules For Writing Terms and Conditions For Your Invoices

The Top 10 Rules For Writing Terms and Conditions For Your Invoices

What invoicing features do you need

Strong terms and conditions for your invoices are extremely important for your business. If your invoices are difficult to understand or confusing to read, you can do some serious damage to your cash flow. Why? Because it the client can’t comprehend your invoice they’re not going just pay you in good faith.

Your client wants to be sure that they’re being charged the correct amount for the good or services that they requested.

So if you want to ensure that your invoices are paid on time, follow these 10 bullet-proof rules when composing your terms and conditions.

1. Consider all possible legal issues and scenarios.

The first thing that you should do before writing down your terms and conditions is to list all of the possible legal issues or scenarios that could happen.

For example:

  • What steps will you take if the client doesn’t pay the invoice?
  • What happens if you’re late on delivering your product or service to the client?
  • What will you do if the customer is dissatisfied with your product or service?
  • What happens if the product is damaged when being delivered by your client’s delivery service?
  • Are there any incentives if your clients pay early?
  • What kind of interest rate will you charge for late payments?
  • What if the customer wants to renegotiate the contract after both parties agree to the terms and conditions?
  • Can your customer ask for a refund? If so, what cases would allow for this?
  • What happens if the scope of the project grows?
  • If there was a misestimate on a budget or quote, who will cover it?
  • Who’s responsible if a product breaks after being purchased?
  • What course of action will you take it the agreement or contract is terminated?

It may take some time to think of and generate this list, but once you have all of this written down you’ll be able to create future terms and conditions quickly with the other clients that you will add to your client list.

Most importantly, however, having the right terms and conditions for your business will ensure that you get paid and protect your business if legal action is ever taken.

2. Include all essential parts of an invoice.

Having the essential components of an invoice will not only speed up the payment process, it will also answer any questions that the client has regarding the goods or services that you provided for them.

When generating invoices, make sure that you include:

  • Invoice number
  • Your logo
  • Your contact information
  • Your client’s contact information
  • The due date
  • The products or services you provided and their costs
  • The forms of payment that you accept
  • Early payment invoice discounts or enforce late fees

Before sending out the invoice, make sure that all information is accurate and that it’s being sent to the right individual. Any mistakes can slow-up the payment process and make you appear less professional.

3. Clearly define the products/services being provided or scope or the project.

This is arguably the most important part of your terms and conditions on your invoice. Why? Because it explains what exactly the client is paying you for.

For example, if you were hired to build a website for a client and it’s more than the client has anticipated, having a breakdown on the time and expenses it cost you to finish job answers any questions or concerns regarding the final amount of the invoice.

4. Shorten your payment terms.

This should be obvious, but when you give customers too much time to make a payment, the longer it takes for you to get compensated, which in turns causes a slow cash flow.

So if you have a customer 45 days to pay an invoice, for example, and that customer paid you two weeks late, that means you’ve waited two whole months to receive a payment.

A payment term of 30 days or less is the norm when it comes to invoicing because it’s effective in keeping the cash flowing. However, review your industry’s invoice standards and ask the client when their pay cycle runs. These factors can help you establish your payment terms.

5. Highlight guarantees and warranties.

It’s not uncommon for any business that sells products and services too often provide warranties and guarantees. It makes them appear more legit and credible and gives the customer peace of mind. If you do offer a guarantee or warranty, make sure that is clearly mentioned in your terms and conditions.

Don’t forget to address topics like situations where the client/customer loses their warranty or guarantee.

6. Pursue late payments.

There will be times when customers don’t pay invoices on time. Instead of being passive, you need to be persistent by tracking down those late payments.

Always keep track of your customers’ payment due dates and contact them by phone, email, or mail if you have not paid you by the due date and include late-fee terms on your invoices, like charging interest on past due payments – which a solid cloud-based invoicing platform will do for you automatically.

If you can not get a hold of the late-paying customer, or they’re not responsive to follow-ups, you may have to send a collection letter, hire a collection agency, or take them to court. Make all of this information clear from the start.

7. One size doesn’t fit all.

Make sure your terms are specifically written for your business. Remember, your business doesn’t have the same needs, resources, and clients that other businesses have. This means that you can’t just copy and paste the terms and conditions from a generic template or another business since they may not address your specific needs.

A template is always good for getting started and steering you in the right directions, but you ultimately have to write terms and conditions that best suit your business and clientele.

8. Always be polite.

Being polite can have a positive impact on your business. Simply adding a phrase like “please pay your invoice within 21 days” or “thank you for your business” can actually increase the percentage of invoices getting paid by more than 5 percent! This may not sound like much, but that could equal thousands of dollars per year into your bank account.

Besides helping you get paid faster, being polite can improve your brand’s image.

9. Make the terms and conditions easy to read.

Put yourself in the shoes of your clients’ customers and understand that they’re not all familiar with industry jargon and even accounting terms, such as “net 30.” Keep the language in your terms and conditions simple and user-friendly.

Additionally, don’t attempt to hide everything on one page by using a small font so that your customers can’t read the fine print. It will feel sneaky to your client and will harm your reputation (even if there is nothing sneaky on your invoice).

10. When in doubt, ask for help.

When all else fails, or you find yourself in a sophisticated or specialized situation, don’t hesitate to seek advice from your mentor, fellow business owners, or your lawyer. These are individuals who have experience in writing terms and conditions and are more familiar with laws then you are.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

CEO at Due
John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.


Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More