Date: Mar 11, 2020
Category:

As a produce salesperson or manager in accounting for your company, I can appreciate the many daily challenges you face that tug and pull for your priority and attention. With that said, the very last thing you want to deal with is payment term inconsistencies within your sales documentation that may put your company in harm’s way while securing every dollar that is owed to you on successful sales transactions.

A best practice while reviewing your sales documentation (sales confirmation, passing, invoice) for consistency is to ensure that your payment terms are the same and universal across all documentation that is sent to your buyer. If you use PACA PROMPT, which is defined in the statute as NET 10 payment terms and due within 10 days of receipt of the goods at contract destination, make sure there is no ambiguity or conflicting terms anywhere else. For example, you may have “PACA PROMPT” on the top right-corner of your invoice with conflicting standard language on your sales confirmation stating “payment due within 30 days of receipt”. This would not only cause potential confusion with your buyer, thus causing potential payment delay, but it could also harmful if it was decided to move forward with a PACA reparation action and your documentation went under further scrutiny from an administrative hearing officer. Be clear and accurate on what your buyer’s payment terms are.

Also important to note that payment terms do not need to be printed on your Bill of Lading (BOL) and is advised not to do so. If you are working with a third party, have them omit the payment terms altogether, reducing your exposure, as some state and federal courts are interpreting bills of lading as a warranted billing document when disputes arise.

It is also prudent to make sure there is a mutual binding agreement between the seller and buyer when payment terms are extended beyond NET 10 terms. If you agree to NET 15, NET 21 or even NET 30 days, make sure you have a dually signed agreement in tact where those specific terms are the contractual obligation. Additionally along those lines, it is preached from the highest mountains to NEVER memorialize payment terms verbally or in writing beyond 30 days. Doing so may waive your PACA Trust Rights and leave your company behind as an unsecured creditor. After all, the sale is complete when the money is in the bank, not when the cooler is empty.

If you’re a Western Growers Regular member and have any questions, comments or concerns on your sales documentation that you would like reviewed for consistency or would you like guidance on any problem files or disputes, please feel free to contact Western Growers Trade Practices Department’s Bryan Nickerson at bnickerson@wga.com or 949-885-2392.

WG Staff Contact

Bryan Nickerson
Manager, Trade Practices
949-885-2392

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