A contract offers protection and security to both parties who enter into the contract, since contracts are legally binding documents. Accountants and lawyers like in-depth discussions about invoices and orders, as both documents contain numbers and legal implications. But there are a lot of misunderstandings about invoices that entrepreneurs need to understand before they start referring to their invoices as legal documents. The question of whether or not an invoice is a legal document is a question that always has people on several pages, but there is really only one correct answer. To start this discussion, let`s see exactly what an invoice really is. An invoice is a list of products or services that a supplier makes available to a customer. The invoice also shows other elements of the transaction such as turnover tax, shipping, processing and other fees. At the end of the invoice, there is a full sum of the costs incurred by the customer for the products or services purchased. Most businesses also have a lot of legal language on their invoices, which outlines the company`s collection policies as well as the phone numbers with which a customer can contact the company to enter into payment agreements.
The invoice also contains all acceptable payment options for the customer to choose from. If a customer has used an order to complete a transaction, the invoice also takes into account this order number. Most invoices have their own individual identification number and all invoices are dated. The most important thing to remember is that the date on the invoice is the date on which the invoice was generated. This is not always the date of the transaction. This becomes important when it comes to determining when the invoice is actually due for customers on the credit due date. Is an invoice a legal document? In itself, an invoice is not a legally binding agreement. If a single invoice were a legally binding document, suppliers could create fake invoices and then force their customers to pay them. If both parties do not agree with the invoice, it is not legally binding.
The weak legal position of an invoice is precisely the reason why sellers require customer signatures or some other form of mandatory acceptance before sending a product. Liability works on an invoice in both directions. Customers could order products and then deny that they have already placed the order. For suppliers who sell consumables, this practice could be extremely costly. Add a payment plan with clear timelines to make sure you get paid on time. You can either accept instalment payments for a constant cash flow throughout the life of the project, or you can accept an advance payment at the beginning of the contract, with the rest of the payment due when the contract is completed. If you charge late invoices, you also insert your late pricing policy into the contract. A handwritten contract may be legally binding if the document contains certain clauses of the treaty and both parties sign that they accept the terms of the contract….