Whether you call them T&Cs, terms of sale or business terms, the idea is the same. It’s a document that sets out the terms of your business arrangement with clients.
Protect Your Business
First and foremost, terms and conditions protect you and your business. Their entire purpose is to set out in writing; the duties, roles and responsibilities of the customer and the supplier. If there is a disagreement of any kind, then your terms and conditions are your written proof, and the perfect way to prove your case in court. Now, you do want to make sure your terms and conditions are unique to your business and not just a template from the internet (which often have holes you can drive a bus through in them). If you’re not sure about your terms and conditions, it’s worth having a lawyer look over them for you.
Ensure Everyone Understands
The best business relationships are built on a mutual understanding. Each party needs to be crystal clear on what is expected from them, and what they should expect from the other parties. They also need to understand when they will be expected to do things (like pay) and what may happen if those deadlines aren’t met (services not delivered, or copyright not transferred). This prevents awkward misunderstandings and potentially upset clients and ensures you as a business owner are in the clear, with written backup, should anything go wrong.
Make It Easier To Chase Late Payments
As a general rule, it’s much easier to chase for money owed to you if you have written proof that there was an agreement in the first place. But if your business doesn’t do contracts, then terms and conditions, clearly stated on your website and easily accessible, can serve the same function. In the legal sense, if a customer agrees to do business with you, then they agree to your terms and conditions, which gives you the protection we mentioned above, and the ability to legally enforce late payment actions if they default on an invoice.
Claim Late Payment Interest
Claiming interest and recovery costs on late payments is something that very few small businesses do, despite being entitled to by statute. There is an amount you are allowed to claim without any terms and conditions in place, called statutory interest, and this is 8% or 8% above base, depending on who you contracted with (business or individual). Some statutory interest cannot be claimed until you actually issue court proceedings. Recovery costs whilst under statute are also at the discretion of the Judge. If you have a late payment interest rate and recovery costs on late payment set out in your terms and conditions, then you can charge that as soon as the debt is overdue, in accordance with your terms. Without terms and conditions, you are limited to statutory late payment interest rate where applicable.
If you would like more information, or support in creating airtight terms and conditions, we would love to help. Just get in touch with the team at Debtcol to book your free, no obligation consultation with one of our experts.