Agricultural Law

If your payment terms are more or less than 10 days, we strongly advise you to change them. Otherwise, you have to go through significant additional gyrations to protect your PACA trust rights. No one is entirely sure how a seller should phrase the 10 day terms, because what you are trying to tell the world is that you are complying with the "full payment promptly" PACA regulations, which have numerous different definitions of "full payment promptly." See 7 C.F.R. section 46.2(aa). The most common, however, states:

"(5) Payment for produce purchased by a buyer, within 10 days after the day on which the produce is accepted."

Consequently, some company simply state "10 days" under payment terms. Others state: "PACA prompt". We recommend "PACA prompt," but only if you consistently use this term throughout your documentation and correspondence with the buyer. In other words, don't say "PACA prompt" on your invoices, but in a collection letter, use a different phrase. If you do not use "PACA prompt," "10 days" is the next best. Never, however, use the phrase "10 days from invoice date," because this may take you out of the "full payment promptly" definition.

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