Here’s a question to ponder: does your business have customised terms and conditions?
If you are like many other business owners, the response is likely to be along the lines of “Umm, not sure”, or “I haven’t got around to that yet.” The truth is that updating T&Cs is one of those tasks that people often put on the backburner – and it can be costly.
Now is as good a time as any to ensure that your terms are current and accurately reflect how you trade with your customers. Even if they were drafted in recent years, it is important to conduct a review to ensure any new legislation is factored in.
Sure, you may be running a successful business and be one of the lucky ones that have avoided payment disputes, but drafting or reviewing T&Cs is an important part of any business’s operations. It also provides peace of mind, so put it on your to-do list now.
The case for T&Cs
So why are up-to-date T&Cs so important? First, they can protect the thing that keeps most business owners awake at night – cash flow. Without them, you could end up spending a significant amount of time chasing unpaid debts and resolving disputes – or, worse still, spending money on debt collection, getting lawyers involved and writing off bad debts.
Second, they act as evidence if a payment dispute occurs. Yes, a handshake agreement with customers sounds nice, but in the absence of written terms and conditions you risk uncertainty and misunderstandings. Clear terms leave little wriggle room for customers who try to go back on their word.
Third, sound T&Cs are valuable for a business in the unfortunate event of having to chase payments through a debt collection agency and seeking to recover costs.
It is important to note that terms and conditions protect both parties and clarify a trading relationship. To ease uncertainty about them, it is advisable to post your T&Cs on your website. Having a credit application in place for new customers to complete is also a smart move.
Remember, though, that terms should be customised for your business. Copying someone else’s T&Cs is risky because they may not have consulted a lawyer themselves. Each business will inevitability have different forces at play.
For example, businesses supplying goods on credit, retention of title arrangements or who have hiring or leasing agreements with their customers, should review whether they need a clause in their T&Cs about the Personal Property Securities Register, and explore whether their interests should on the register.
Other possible pitfalls exist, but the message is clear: do not cut corners. Spending some money up front to draft proper T&Cs can potentially save you significant headaches and legal costs down the track. Engaging a lawyer early in the process will protect your business and its cash flow.
Help at hand
How can we help you? Kearley Lewis clients can request a complimentary review of their terms by our lawyers. Our Lawyers will provide feedback on their recommendations and can improve a businesses ability to successfully follow up on unpaid accounts.
Don’t forget – laws change, as does the way you trade with your customers. Check you T&Cs and sleep soundly!