Growers, distributors, shippers and others, who deal in fresh and frozen fruits and vegetables, located in the United States can help to protect themselves from unfair and fraudulent practices, including nonpayment of invoices, by obtaining a license from the United States Department of Agriculture (USDA) to ship produce under the auspices of the trust established by the Perishable Agricultural Commodities Act (PACA). In order to take advantage of the benefits under PACA a grower must give his customer notice that he is shipping under the protection of the PACA trust by including a LEGEND on his invoice which indicates this, and fulfill the other requirements of the PACA trust. But what can a grower do to protect himself if he is not located in the United States, or is located in the U.S. but does not have a PACA trust license?
Growers based in foreign countries and U.S. growers not licensed under the PACA trust can help to preserve the benefits available to them under the PACA trust by sending a NOTICE to their customer on a list, which includes the unpaid invoices for shipments for which the grower intends to preserve his benefits under the PACA trust. The following is an example of a form of NOTICE which would appear at the top of the list:
NOTICE TO PRESRVE BENEFITS UNDER THE PERISHABLE AGRICULTURAL
COMMODITIES ACT TRUST
The NOTICE would then be followed by a statement that you are preserving your PACA trust benefits for the following unpaid invoices for shipments. A list of invoices would then follow which includes:
- Invoice number
- Invoice Date
- Terms of the shipment – such as price or pricing method
- Product – including product description, count and size
- Due date – The date payment is due. The due date should be no more than 30 days from the date the recipient receives the PACA trust NOTICE.
- Invoice total – total due on the invoice
- List total – total of all the invoice totals
The list of invoices could be followed by language on any dishonored checks if applicable and a statement on responsibility for attorney’s fees incurred in a collection action.
Please remember, the NOTICE is used by growers, shippers, etc. base outside the United States and those located domestically who are not licensed under the PACA trust. Growers licensed under the PACA trust should use the LEGEND on the face of their invoices and comply with the other requirements of PACA.
Please note that the foregoing is an example and may not be appropriate for your situation. As with all matters of a legal nature, it is important to seek the advice of legal counsel regarding the NOTICE and any other requirements of and compliance with the terms of PACA.
SOFTWARE TO SUPPORT PACA
Automated accounts receivable software, like the package offered by Lockstep Collect, are valuable resources that help to support the invoicing and collection of PACA accounts receivable. Software functionality should include the ability to group PACA accounts and flag PACA invoices. Invoicing should indicate a PACA account, include the PACA notice statement when applicable, and have a clearly marked due date which agrees with PACA payment terms or a written payment terms agreement.
Produce growers, shippers, etc., whether domestic or foreign, licensed or unlicensed should consider taking advantage of the benefits available under the PACA trust, and make sure they have automated accounts receivable software to support it.