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Q: Sending out invoices ( Answered,   2 Comments )
Subject: Sending out invoices
Category: Business and Money > Accounting
Asked by: chairs-ga
List Price: $10.00
Posted: 07 Jan 2005 14:58 PST
Expires: 06 Feb 2005 14:58 PST
Question ID: 453790
How far in advance can I legally invoice an order before it is shipped?
Subject: Re: Sending out invoices
Answered By: legolas-ga on 12 Jan 2005 01:03 PST
Hi chairs-ga,

There is no law that specifies at what point you may or may not send
an invoice to a client. However, there are some common law issues that
may or may not apply to your business model that you may be interested

You can send an invoice at any time after a contract has been entered
into. However, there is one consideration that may cause you to want
to invoice *early*. The Statute of Frauds specifies that any contract
that can not be fully completed within one year must be in writing. An
invoice is such a 'writing' of the contract as it represents a meeting
of the mind. So, say you sell a widget to buyer, and verbally agree to
delivery the widget 16 months after the contract is formed (verbally).
The Statute of Frauds says that the contract may not be
enforceable--unless of course you invoiced the buyer (which may
constitute a "writing" of the contract).

An invoice, in a business model is a convenient form of a contract.
Really not much more than that, and therefore, you can use one at any
point in time--assuming there is a valid contract in existence (for
example a verbal contract).

One other consideration, is that some states may have statutes that
prohibit the receipt of money in certain industries (often where there
is a professional license involved) when the money is not placed into
some sort of escrow account. In other words, if I invoice you for a
home repair project and want payment upfront for the entire amount, I
may be prohibited from doing so by statute. If you are in an industry
that is licensed, you may wish to check with your licensing body for
more specific information. But, that is more to do with the receipt of
money than the act of invoicing.

One other thing--to clarify one of the comments below... Sending an
invoice prior to the goods being sent is common practice in many
industries. For example, eBay operates on a "buy, invoice, pay, then
ship" model. Lawyers will typically receive a retainer for invoices
that will be forthcoming in the future. Also, the transfer of title
and shipment of goods is not where the liability is created. The
liability is created when both parties agree to be bound to an
agreement. Let me explain... If I agree to sell you 10 widgets at $20
each and fail to ever send them to you, you may be able to sue me for
the damages you sustained (there's a long list of caveats as to when
that would be appropriate and what type of damages you can receive
that's quite outside the scope of this question). Conversely, if I am
ready, willing and able to ship the widgets but you never pay me,
there is still a liability--and I am entitled to collect the money
owing under the agreement prior to shipping the items to you.

In other words, I don't have to risk my product on your bad credit in
order to collect money from you. Once I get the money from you, I can
send the items OR, if the contract is breached by you, I may be able
to collect damages and yet never send the items.

Hope that answers your question... If there are any parts that you
find confusing, please ask for clarification prior to rating and thus
closing this question.



No search was performed.. This information is known to me from
attendance at law school.
Subject: Re: Sending out invoices
From: world3d-ga on 07 Jan 2005 21:38 PST
There is no law regarding when you can or can not send an invoice. 
This is between you and your customer and is set by the terms that you
agree to when entering into a purchase agreement.
Subject: Re: Sending out invoices
From: respree-ga on 11 Jan 2005 23:15 PST
While there are no laws on when an invoice can be sent, it is
generally inappropriate to send an invoice 'before' the product is
sent.  Typically, title to the product transfers from buyer to seller
upon shipment of goods.  It is the action of title changing hands, and
not before, that a legal liability is created.

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