Your terms and conditions of service are an opportunity to do more than just set out the expectations of both parties involved in a particular business transaction. In any business contract, your customer is effectively two different entities – there is the business itself, but there is also your human point of contact with theRead More
Your terms and conditions of service are an opportunity to do more than just set out the expectations of both parties involved in a particular business transaction.
In any business contract, your customer is effectively two different entities – there is the business itself, but there is also your human point of contact with the company, and ultimately this human element is what determines when – or if – you get paid for the goods and services you supply.
Having terms and conditions of service in place is your chance to get a signature on paper (or in equivalent electronic form) to legally bind the individual to your terms, reducing the chance for them to later argue that they did not agree to your conditions.
The documentation also gives you a clear record of having an agreement in place at all with the company, which can prove crucial later if it emerges that the individual who placed the order did not have authorisation.
Like all new supply agreements, you should run a background credit check, as this will also help you to spot any suspicious circumstances, such as orders placed by an individual who does not even work for the company they claim to represent.
This is akin to the threat of invoice fraud, where invoices are issued purporting to be from a legitimate supplier, but with another party’s bank details included so that the payment is made to them instead.
According to figures from Experian, this problem is on the increase, and in the 14 months to the end of 2014, $215 million was lost to invoice fraud in 45 different countries worldwide; in the UK, just under 750 cases were reported in the first half of 2015, compared with about 600 cases in the full 12 months of 2014.
Your terms and conditions of service can make clear exactly when and how you will invoice, as well as any rules you choose to apply to prove when an invoice has been issued by you, and not by a fraudulent third party, and the details of the account into which the funds should be paid.
By setting out such information from the very beginning of your supply arrangement, you can ensure that no fraudulent third party is able to issue a convincing invoice and divert funds that should be rightfully paid to you into their own account instead – at the risk of leaving your customer with insufficient funds to pay the correct invoice.