Why are your terms and conditions of doing business important? In particular, why are non-standard terms so important? And how are they relevant to avoiding or recovering unpaid debts?
In simple terms, this is where you can put all the details about the provision of goods and services by your business and create a legally binding document to protect the business in the event of a complaint, dispute or failure to pay for goods and services supplied in a timely manner or not at all.
Anyone in business will know that unpaid debts are a serious matter for a business; they can disrupt cash flow, damage profitability and potentially harm your business and reputation. It is important for any business that trading is carried out on terms set by them.
There are a number of ways that a business can reduce the risk of unpaid debts including ensuring invoices are timely and accurate, effective credit control procedures are in place but also checking and providing their terms and conditions to their customers or clients.
The importance of terms and conditions
Relevant and up-to-date terms and conditions are important to protect unpaid invoices and should be kept under review. They can also help limit liability following a business transaction.
The customer should be provided with the terms and conditions of doing business at the start of any agreement. The terms should include the consequences of late payment and the penalties associated with a breach of the terms and conditions such as interest that will be charged. These consequences and penalties can be used to apply pressure to obtain what is due from the debtor.
Terms and conditions are the basis on which you do business with your customers, so it is important to get them right. It is important also to ensure they are referred to in any order confirmation or other contract document. They set out the fine details which can be important if a customer is using a lack of clarity as an excuse for non-payment.
Why do tailored non-standard terms and conditions matter?
Having tailored non-standard terms and conditions are important as, in conjunction with a detailed invoice, they have the power to ensure payment, or if not, enforce the debt through the courts.
"Standard" terms and conditions are unlikely to afford the same protection particularly if they have been "lifted" from another business. The reality is each business needs terms of business tailored to their specific products, services, and payment terms to be effective. This might include stricter terms and conditions for customers who have been late-payers in the past, but with whom you still wish to do business.
Whether you supply goods or services, it is important that your business has a clear contract with your customers. This can be critical if a business has late payment difficulties with its customers.
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