One of the responsibilities of a business owner is to be able to make successful transactions with potential customers, but before closing the deal, it is important that you know how to set up trading terms and conditions.
This is often one of the least talked about aspects of owning a business. Sometimes some tasks, like marketing a product or managing a team of employees take the front seat.
Your trading terms and conditions are a legally binding written agreement between you and a client and it details the duties, rights, roles and responsibilities of each party.
One of the points that you may want to highlight in your trading terms and conditions is how you intend to protect yourself and your business against late or non-payments. In the event that you need to go to court, this contract will serve as evidence that a client hasn’t completely paid a product or service that you have already provided.
There are other points that a comprehensive written contract will include, which will be discussed below:
What Do Trading Terms and Conditions Include?
There is no need for a contract to be loaded with highfalutin words; the easier it is to
understand, the better.
You want the trading terms and conditions to be clearly explained and easily understood so that both you and the client have a full understanding of it. The rights and responsibilities of each participating party are also detailed and should abide by the rules and regulations of the industry you are in (if applicable). They also explain what may happen if one of you don’t fulfil your end of the contract.
This is a list that you may refer to as a guide, but depending on the business or industry you are in, the points listed may change or vary.
- A detailed description of the product or service that the client will avail. Not only will this serve as a checklist for both you and the client, but it will also let the client be aware that any add-on you decide to include in the package isn’t included in the price quoted.
- In your payment terms, include what day or date when the payment is due, and how it should be made. Some businesses are more flexible when it comes to how payments should be made. For example, online bank transfers or the use of PayPal and other online payment merchants are increasingly becoming more accepted. The amount is automatically credited to your account and you can see in real-time the transaction.
- What would happen if the customer fails to pay on time or doesn’t pay at all? This may include conditions such as:
- Extra charges or interest that will be added over and above the payment due
- Letting the customer know that they will be liable for any costs that may incur for the recovery of unpaid invoices, including but not limited to hiring a debt collection agency as well as court fees.
- Policies on refunds, warranties, repairs, guarantees, and exchanges. Be clear about how long a warranty lasts, what it covers, etc.
- A projected timeline of when a product or service will be delivered or ready, and what would happen if the timeline isn’t followed.
- Do include any laws or rules that cover the contract
- Don’t forget to also state your cancellation policy. Be detailed about when and how they can cancel an order, and what would happen if they do.
By giving a detailed written agreement, you lessen the likelihood that anyone involved with the transaction could be confused about any of it. By signing the contract, this means that you and the client agree to the terms and conditions.
Make it Professional
To ensure that your contract is worded correctly and professionally, enlist the services of a debt collection agency. They can craft a contract that is not only legal but also one that aims to protect your interests in possible situations.
Trying to do one yourself might do more harm than good. For one thing, you may not be able to cover all the necessary points you would want the agreement to encompass. Some business owners would copy other contracts but this is highly inadvisable. No two businesses are the same. You need a written agreement that is aligned with your business.
For example, one business in the same industry would have different payment schedules but because they operate on a much larger scale than you, they can afford to have longer timeframes, so as to not affect their cash flow.
This little detail can cost you big time.
While there is nothing wrong with studying other contracts, copying them word for word is unwise. Contact us for a professionally written Terms and Conditions that will protect your business and best interests.