Terms and conditions on an invoice: sample wording, clause by clause

Terms and conditions on an invoice are the block at the foot that says when payment is due, what happens if it is late, where to pay and who to ask. Eight to ten lines is enough. The part that changes behavior is small: the due date written as a date, the late fee as a figure, the early payment discount already calculated, the account details and a name with a phone number. Everything else in the block is read by nobody and exists for the one invoice out of two hundred that ends in an argument. Below is sample wording for each clause and what each one is doing there.

The blank document to put this on is the invoice template, and the version with tax columns is the GST invoice format. This is general information and not legal advice. Have your own terms checked before you use them.

Sample terms and conditions block

Copy this and change what is in brackets. It is written for a supplier invoicing a business buyer.

What each clause is doing

The late fee clause only works if it was agreed first

A late payment charge is a term of the sale, not a decision you make when the money is late. Written into the order and repeated on the invoice, it is a number both sides saw. Added for the first time in a reminder on day 45, it reads as a penalty invented after the fact, and the usual outcome is that the buyer pays the principal and ignores the charge, which leaves you with an open balance of a few hundred rupees that nobody will ever settle. Decide the rate once and put it on every invoice from the first one.

The early payment discount has a tax condition

Under section 15(3) of the Central Goods and Services Tax Act, 2017, a discount given after the supply has been effected is left out of the value of supply only if it is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices, and the input tax credit attributable to it has been reversed by the recipient. A prompt payment discount offered in a reminder meets neither condition. That is the practical reason the clause belongs in the terms from the start. The line order and a worked example are in the discount invoice.

The title clause, and what it is actually worth

Goods remain our property until the invoice is paid in full is in almost every terms block, and most suppliers have no idea what it does. On its own it does not let you walk into a buyer's warehouse. What it does is three smaller things, and they are worth having. It keeps the goods out of the pool of assets if the buyer becomes insolvent, as long as they are still identifiable and have not been built into something else. It gives you standing to ask for them back before the dispute escalates. And it tells a buyer reading the terms that the sale is not finished on delivery.

The condition that makes it usable is identifiability, which is why the clause is strong for machinery with serial numbers and weak for a tonne of cement that went into a slab last week. If you supply materials that get consumed, the clause that does more work for you is the discrepancy window, because it fixes the date after which the quantity delivered stops being arguable.

The discrepancy window, with a date on it

Write the window as a number of days from the invoice date, and put the resulting date on the invoice. Any discrepancy must be notified in writing within 7 days of the invoice date, that is by the 19th. A window the reader has to count is a window nobody uses, and an unused window is the one that gets ignored at day 60 when the buyer suddenly remembers a short delivery.

Three lines that are usually missing

1. 1A name and a phone number. An invoice with only a company email gets a query that waits two days for an answer, and the payment waits with it.
2. 2The delivery or service date, separate from the invoice date. When a buyer disputes a quantity, the question is what arrived on which day, and the invoice date does not answer it.
3. 3The statement period, if you invoice the same buyer several times a month. Without it, a buyer paying a round figure leaves you guessing which invoices it covered.

The terms are only half the job

A due date on an invoice does nothing on its own. What gets the invoice paid is somebody noticing on the day. Makatea sends the reminder on the date on each invoice, by WhatsApp and by email, keeps every invoice as its own charge with its own due date, records the payment when it arrives and stops writing to that buyer. It reminds, records and communicates, and does not move money: the payment keeps arriving in your own account by the route already on your invoice. It is the best choice when you invoice the same buyers every month, because the thing it keeps is each invoice and its date, and that is exactly what a terms block cannot do by itself.

The five emails to send after the due date, at 1, 7, 15, 30 and 45 days, are in the past due invoice reminder. Plans are USD 119 a month for Essential, USD 219 for Momentum and USD 349 for Scale, with 14 days free and no card, on pricing.