A billing mandate is a written or verbal agreement that allows a business (i.e., the principal) to delegate issuance of invoices to a third party or client (i.e., the agent) in full compliance with regulations. A billing mandate often takes place between businesses that regularly engage with each other commercially or when the principal requests assistance from an accounting firm for certain tasks. Mandated invoices must clearly indicate they were created by an agent. If invoicing or value-added tax (VAT) requirements are not met, the principal remains solely responsible.

In this article, we explain billing mandates, including how they work, what their requirements are, and how to establish them.

What’s in this article?

• What is a billing mandate?
  
• Why establish a billing mandate?
  
• Different types of billing mandates
  
• How billing mandates work
  
• Setting up a billing mandate
  
• Billing mandate requirements for each party
  

What is a billing mandate?

A billing mandate is an agreement that a business uses to authorize a third party to issue invoices in its name and on its behalf. This allows the business to offload certain administrative tasks by assigning the issuing and managing of invoices to another entity.

This agreement is between two parties: the principal—the seller who wishes to delegate invoicing to a third party—and the agent assigned the task. The agent is often the business’s client or a subcontracting company.

A billing mandate is the formal document that establishes, defines, and structures the collaboration between the two parties. To avoid misunderstandings and disputes, the mandate defines the roles and responsibilities of each party.

Why establish a billing mandate?

Usually, the seller creates and issues invoices. However, Article 289 of the French General Tax Code (Code général des impôts, or CGI) allows businesses to assign this task to a third party or client. Billing mandates are legal alternatives that are attractive for businesses that manage large volumes of transactions but do not wish to create invoices.

Self-billing

Billing mandates are most often used between regular, long-term business partners. The seller might propose a billing mandate that allows the client to issue and pay invoices, which is called self-billing. This practice is common in certain industries—including agriculture and wholesale distribution—to simplify the payment process.

When a customer issues an invoice in the name of and on behalf of the seller, the invoice must display the word “self-billing” (autofacturation).

Invoice subcontracting

A business can also assign the issuing of invoices to an external service provider—such as a certified accountant—to subcontract the invoice process. Delegating this administrative process to an expert has several advantages, such as reducing the risk of errors and noncompliant invoices. The business also benefits from substantial time savings, enabling it to focus more on its core operations.

The subcontractor can charge a fee for this service, particularly if it is an accounting firm. With the principal’s prior approval, the agent can also assign the invoicing process to a subcontractor.

Different types of billing mandates

Billing agreements are generally entered into writing, which can help avoid ambiguity and be used as evidence in the event of a dispute. The agreement specifies mandate procedures and clearly defines each party’s role. If the process is to be a one-time business arrangement, a verbal mandate agreement is also possible.

How billing mandates work

A billing mandate must be established before the agent starts issuing invoices in the principal’s name and on its behalf. The agreement is not required to be in a specific format and can be either verbal or written. However, if requested, both parties must be able to prove to the French tax office that the billing mandate exists.

According to French tax regulations, two copies of each invoice must be issued under the mandate. These invoices must also include the same mandatory information as traditional invoices and must also clearly indicate that an agent has issued them. It is recommended to include a note on all mandated invoices, such as, “Invoice created by X in the name of and on behalf of Z” (Facture établie par X au nom et pour le compte de Z).

The principal must accept invoices created under a mandate before they are issued. Mandated invoices are often validated by affixing the principal’s signature or stamp.

Setting up a billing mandate

The two parties determine the agreement terms. Minimally, the mandate must specify the following:

• Its duration
  
• Deadline for the principal to contest an invoice issued on its behalf
  
• Procedure for accepting invoices
  
• Scope of the mandate (e.g., how to handle initial and corrective invoices, whether it is a one-time or ongoing series of transactions, etc.)
  

Here is a sample billing mandate for use as a template.

Billing mandate requirements for each party

For a billing mandate, the principal and agent have different obligations. The principal must do the following:

• Provide the agent with all information required to create compliant invoices
  
• Indicate to the agent any change to the principal company’s information (e.g., a change in billing address or establishment directory identification system (SIRET) number)
  
• Request a copy of the invoice, if not received
  
• Declare, collect, and remit VAT to the French tax office, as applicable for invoices issued on the principal’s behalf
  

The agent must do the following:

• Carry out the assigned task
  
• Separate invoices created for its own use from invoices it issues on behalf of the principal
  
• Create invoices in duplicate and follow the tax regulations applicable to the principal
  

Even if a billing mandate has been issued, the principal remains fully responsible if the agent does not follow invoicing or VAT regulations (e.g., failure to include mandatory information, incorrect VAT amount). The principal is not exempt from liability if the agent fails to comply with invoicing and VAT obligations.

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