Proper PHC service invoices are important

 

BY RICHARD P. DiTOMA, L.M.P.

contributing writer

 

In order for a contractor/consumer transaction to be considered a valid contract there must be a “meeting of the minds” between the contractor and consumer about that which is proposed to be done before any work commences.

 

Verbal contracts can often lead to “he said/she said!” arguments, and are more difficult to prove than written contracts. As a contractor with a verbal contract, your client can claim that the $100.00 chrome-plated faucet you installed in their home was supposed to be a $1,000.00 gold-plated faucet. Proving them right or wrong with a verbal contract could be challenging.

 

A properly composed written contract defines the obligations of the contractor to the client and the client to the contractor, and removes all ambiguity. Regardless of the type of contracting work you perform, properly written contracts are always better than unclear verbal contracts.

 

In the PHC service industry, invoices are usually the only written document between a contractor and consumer. Those invoices should have certain information pertinent to the transaction between the contractor and the consumer. They are not only an invoice, but also can prove whether a “meeting of the minds” existed before any service began.

 

Many PHC service contractors use invoices that may define the task, but do not define the terms and conditions. PHC contractors who use the T&M pricing method can only put their rate per hour on the invoice before work commences. That means the consumer who assumed the job would only take an hour or less could become angry when they receive a bill for over two hours. In either case, ambiguity will once again cause friction between the contractor and consumer rather than build a good strong long lasting consumer/contractor relationship.

 

Another example of ambiguity is the lack of clear terms and conditions, a contractor I am in the process of helping make the transition from T&M pricing to contract pricing faxed me the current invoice form he is using. It was a simple invoice with no terms and conditions except:

 

1) A space for his labor rate per hour. It did not state per technician. That could be problematic.

2) “Warranty – 1 year parts, 60 days labor.” This term does not state anything about material that is abused by the consumer in any fashion. It also makes one wonder why he is only willing to stand behind his workmanship for 60 days.

3) “Balances not paid within days of bill date are subject to a late charge of 11/2% per month.” He should be paid at the time the job is performed, not 30 days after the fact. His company name has the words “Plumbing & Heating Corp.” in it. But, he acting as if it those words are “Savings & Loan.”

 

Proper PHC service contractor invoice information

 

A proper invoice is one that removes ambiguity by showing a description of all accepted tasks: all agreed task prices, terms and conditions; proves that there was a meeting of the minds before any work commenced; shows that the consumer authorizing the work is the owner or authorized agent for the property; shows the payment status of the invoice; and shows that the consumer acknowledged the satisfactory completion of the work. The following list is the minimum number of items that should be included on a phc service invoice/contract.

 

1. Your company information — name, address, phone numbers, licenses, etc.

2. The customer’s information — name, address, phone numbers, etc.

3. The date of service.

4. The invoice number (by numbering your invoices and making your technicians responsible for invoices issued to them you will have a control to help insure that your company is not handing out bogus receipts for which you can be held responsible, tax-wise, warranty-wise, liability-wise etc.).

5. Job location (when job location is different from information in item 2).

6. A statement explaining your business protocols, terms and conditions as specifically as possible. And, which directs them to other parts of the invoice/contract that includes additional terms and conditions.

7. The customer’s acknowledgement and signature showing acceptance of your company procedures.

8. The service call charge (minimum fee to travel to consumer) to which the customer has agreed.

9. The reason for call.

10. In bold font (preferably at the upper portion of invoice/contract form) a statement notifying consumer that they are entering into a binding contract, such as:

 

Client notification

 

Read this agreement before signing it; this agreement is a binding contract.

 

11.Whether service is being performed during regular or after regular business hours.

12. The number of each proposal (reference helps identify each proposal).

13. The description of each proposal.

14. The proposed amount of selling price of each proposal without sales tax. (Your company protocol should have explained that all prices are subject to applicable taxes).

15. The customer’s signed acknowledgement and authorization to perform services at the agreed prices, terms and conditions.

16. The customer’s initials showing further acceptance of each task at the agreed price.

17. The agreed price for the pertinent proposal.

18. Any applicable discounts

19. Summation area for charges.

20. Payment method (cash, check, credit or debit cards).

21. Service agreement status, if any.

22. Technician in charge of service.

23. Customer’s acknowledgement of satisfactory completion of agreed service/work.

 

A proper invoice can save you much grief, especially when you find yourself dealing with a consumer from hell. When you put the prices, terms and conditions down on paper; have the consumer acknowledge the agreement before they authorize you to commence the service; perform the agreed service in an excellent manner; have the consumer acknowledge the satisfactory completion of your obligations under the contract; and stand behind your workmanship for a reasonable amount of time, consumers from hell don’t have any legitimate reason to complain about the transaction.

But keep in mind, the design of your invoice/contract requires much more scrutiny and detail than the aforementioned list of items. If you need assistance setting up your invoice format, give me a call at 845-639-5050. I design customized forms for contractors. I wish you good health and much prosperity!