Date: May 10, 2017

From time to time it is a good business practice for you review your pre-printed language on your company invoice to make sure it contains the necessary contract terms, conditions and disclosures.  As I have stated in past blogs, your invoice memorializes and documents your understanding of the contract negotiated between you and your customer, and contains critical exclusions and/or contingencies of the sale. Investing less than one minute of time to review your invoice, or EDI transmission, as well as any passing will avoid any inadvertent inaccuracies.  Here are five critical areas which I strongly recommend when reviewing your invoice:

1) Payment terms

  • I strongly recommend that you have the same payment terms with all customers. Those terms should be PACA prompt payment. This means that payment is due within 10 days of receipt of the goods at contract destination.  If your payment terms are PACA prompt pay (10 days) , there is no need for any signed written agreement (extending payment terms) between the parties as these terms are consistent with the PACA regulations.

2) Terms of Sale

  • Based on contract terms, the invoice should reflect the terms of sale (i.e., FOB, delivered, consignment and so on).

3) PACA Trust language plus exclusions

  • To ensure protection under the PACA Trust, it is imperative that your invoice contains PACA Trust verbiage that discloses the sale as subject to all the applicable provisions and protections of the Perishable Agricultural Commodities Act Trust. The Trust verbiage must be exact and is as follows: “The Perishable Agricultural Commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities and any receivables or proceeds from the sale of these commodities until full payment is received.”

I routinely review Western Growers member’s invoices and I have noted that some shippers have a handful of omitted words from the PACA trust language.  I plead with you to carefully review the PACA verbiage that I have provided above in italics and compare (word for word) against the language printed on your invoice for any possible omissions. Not using the exact language may jeopardize your PACA trust claim.

For any sale, regardless of the commodity, you can consider various types of exclusions/disclosures to your contract. However, such exclusions/disclosures must be properly disclosed at the time of negotiations and then documented on the invoice. It is also appropriate to disclose any special terms on the passing.

As a shipper, some of your customers might require Electronic Data Interchange (EDI) invoicing and reconciliations of settlements. When invoicing via EDI, it is critical that you have the PACA Trust language on your transmission if you wish to be PACA Trust protected; otherwise you will forfeit your PACA Trust protection by leaving this verbiage off your EDI transmission. 

    4) An additional tip for those shipping iceberg lettuce

  • Invoices and passing’s can reflect the following verbiage: “Unless otherwise stated, all Sales FOB No Grade Contracts. Good delivery standards apply excluding bruising and/or discoloration following bruising.”

    5) Finance charges and attorney fees

  • For your convenience you may review a sample invoice showing appropriate finance and attorney language.

So, there is no time like the present, take ownership of doing this one minute review yourself or ask a colleague inside your organization to do the review now. If you need guidance or help, my office is available to review your invoice or EDI and talk you through these critical areas. You can reach me at (949) 885-2269 or email me at TommyO@wga.com.

WG Staff Contact

Produce Price Index

Think farmers are making most of the money from your grocery bill? Think again. Use the Produce Price Index (PPI) to find out the difference between how much you spend on fruits and vegetables and how much actually goes back to the farmer.

Subscribe to Produce Insights

Subscribe to Produce Insights

Fill out the following form to get updates to the Produce Insights blog.