This contact tip is about the importance of an invoice provision in your contract.
Most businesses rely on invoices as a key part of their financial controls. Invoices trigger internal approval processes for the spend and provide critical documentation about the purchase. These businesses do not, and in some cases cannot, make payments without an invoice. Yet many of the contracts entered into by these businesses do not reflect that reality.
These companies have contracts that say something like "Buyer shall pay the Fees to Seller within 10 days after Delivery." Notice how the payment is conditioned only on delivery. It is not conditioned on receipt of an invoice.
Drafted that way, it is unclear if the buyer is excused from payment if the seller does not submit an invoice or submits it days or weeks after the delivery.
When I'm the buyer, I prefer to condition all payments on an invoice. My provisions read something like "Buyer will pay Seller the Fees within X days after the later of Delivery or receipt of Seller's invoice." Even though the reality is that most vendors send invoices quickly, it's better not to rely on typical practice for something as critical as a payment obligation.
This may be a nice to have for some companies. But for the companies where I've worked that do nothing without an invoice, it was a must.
How do you handle invoices in your contracts?
