In the recession, more than ever, any well run business needs to ensure that they are getting paid on time. Cash is king and to get your money in your bank account at the earliest opportunity, you need really clear terms and conditions. You may be surprised by how little it costs for an experienced business solicitor to draft tight terms and conditions for you. Here are some issues you and your solicitor may want to consider:
1. Make sure that it is your terms and conditions that govern the performance of the contract – not those of your client or customer.
2. Make clear when payment for goods or services is required – this is well worth checking. You may find your current payment terms are far too generous. It’s not uncommon for businesses to state payment is due 30 days after the end of the calendar month when the invoice was sent – that could mean a delay of up to two months before you can even chase for your own money. Reducing your credit period to perhaps just 14 days from the date of invoice could make a huge difference to your cash flow.
3. Don’t forget that you have a legal right to charge interest on unpaid bills – it’s always good, however, to include details of such interest charges in your terms and conditions.
4. Don’t rely on a verbal contract – it might prove binding. Be aware that verbal contract agreements are enforceable in certain circumstances. You will be much better off if you make sure that your written terms govern any agreement.
5. Check that your terms and conditions are both clear and easy to understand. Whilst you may be able to rely on your terms and conditions in any court case, the value of a transaction may mean it is simply not worth taking legal proceedings – and the whole point of clear terms and conditions is to avoid problems arising in the first place.
6. Ensure that your client or customer is aware of your terms and conditions. There is little point in hiding your terms and conditions away where they will never be read. Making sure your clients or customers are fully aware of your terms and conditions will significantly reduce the risk of any subsequent disagreement between you.
Making sure that you have the right terms and conditions for your business is a critical element in preparing to make the most of the economic recovery. If you haven’t got these six points covered, do have a word with an experienced business solicitor.
Tim Bishop is senior partner of Bonallack & Bishop, a firm of UK business law solicitors with offices in the south-west, offering legal services to private and business clients. Tim has spearheaded the firm’s expansion, seeing it grow by 1000% in the last 12 years. He is responsible for major and strategic decisions and sees himself as an entrepreneur who owns a law firm.