Including terms and conditions in contracts doesn’t have to be hard, but it’s useful to structure the contract appropriately in the first instance, to avoid any disputes later.
For instance, whereas the main document of a contract is usually very fixed in its wording, and in what both parties have agreed to, it may be preferable to leave scope to change the terms and conditions of the agreement over time.
You may want to do this by providing the terms and conditions as a separate document, which can be replaced or amended through mutual agreement – particularly if the contract you are signing is likely to remain in place over the course of many years.
One of the most important pieces of paperwork to get right are your terms and conditions for selling goods – it might seem like they’re just there to set a deadline for payment, but they can do much more besides.
Terms and conditions for selling goods – rather than services or other supplies – are particularly important as they can spell out who owns the items until payment is made in full.
Although it might sound strange, without clear written terms, it can be difficult to prove that you still own goods after they have been supplied, but before they have been paid for.
Payment terms negotiation can strike fear into the heart of even the most steeled businessperson – you’ve gone to the trouble of drawing up bespoke payment terms that perfectly suit your risk profile, only to find that a particular supplier or customer has totally different ideas about when they want to pay or get paid.
It’s not just about deadlines – a big-name customer might expect a huge credit limit that puts your entire cash flow under threat, for instance, or might request a perk like a discount for prompt payment.
It’s essential to write the right payment terms for an invoice; the invoice is the request for payment, but the terms set out the full details of how that payment should be made, how long the customer has to pay it, and what will happen if they fail to do so.
Small business terms and conditions are one of the first recommendations made to many people when they set up a company of their own for the first time.
You don’t have to be registered as a company – sole traders registered as an individual can also fall under the remit of small business terms and conditions, at least in the sense in which we’re discussing them here.
The important thing is to set out Ts & Cs that outline the nature of your business, what you will supply – whether it’s goods or services, or a combination of both – what you expect from your customers, and crucially how and when you expect to be paid for the work done.
If you want to include an incentive for prompt payment in your terms and conditions discount codes are a good place to start.
They allow you to offer a percentage price deduction in return for your customers doing something they might not normally choose to do, but which is better for your business.
Prompt payment is just one example of this, and discount codes – especially if they expire when the incentive deadline has elapsed – are a great way to police this kind of discount if you take payments online.
You might also reward a particular type of payment with a discount, for example if payment is made electronically rather than the customer sending you a cheque that requires a trip to the bank.
When it comes to writing your terms and conditions discount codes have another useful function – they give the customer an extra reason to read your small print in full detail.
When you set up a new supply agreement, send out an invoice or chase a customer for non-payment, a cover letter is an important part of the documentation you send out – so whatever the reason for sending it, here’s our guide to credit control cover letter best practice.
First up, recognise that your cover letter is not just a friendly greeting; it serves an important purpose, and should be worded to achieve that purpose, not just to say hi.
If you often find you have problems getting customers to pay on time, and your in-house accounts team aren’t up to the job of chasing them, it might be time to outsource your credit control department.
There’s nothing wrong with admitting you need some outside help – finance teams have plenty of other tasks besides chasing client debts, and especially if your company is growing fast, you might find your team have simply been overtaken by the breadth of their role.
When you outsource your credit control department, you tap into a scalable pool of expertise and experience that would be very difficult, if not impossible, to hire directly as your own employees.
Setting the right payment terms for perishable goods is a challenge in itself – the obvious example is food, which can range from on-site catering, to wedding cakes, to any kind of hot or cold prepared food.
But there are a whole range of other perishable goods, and the same concerns might equally apply to cut flower arrangements, live animals such as pets, and so on.
In particular, if the item in question is likely to perish in less than 30 days – such as a bouquet of flowers might – then it is essential to ask yourself whether 30-day payment terms are appropriate.