When starting a small business there is a lot to do, and it can
be tricky to manage the competing priorities. Getting your product
or service into the market is top of the list. Before you know it,
the business is moving along and clients are coming in.
Many people trust that their clients will pay what the goods or
the job is worth. But to greatly increase your prospects for good
client relationships and to safeguard your cashflow, it is
important to have clear and effective agreements. Good agreements
make each party's obligations clear and are free from
A simple way to address this is to develop a straightforward
terms and conditions document which can be used everyday. It's
never too late to do this.
Small business owners can be tempted to simply adopt the terms
and conditions of another similar business that might have fallen
into their hands or, even more risky, to use a terms and conditions
document that they have found on the internet. This might be in an
attempt to save on legal costs or because they feel overwhelmed by
legal issues. Or, it could be that the business owner thinks that a
lawyer will draft something long and complicated that will scare
away potential customers.
However, a good terms and conditions document will:
enhance client relationships through clear communication,
particularly because clients will know upfront how they will be
charged, when they need to pay and how any concerns will be
treated. Friction and mistrust is far more likely to occur whether
there is uncertainty or a reluctance to openly discuss important
improve cashflow, by including clear requirements regarding
payment timeframes and the consequences of late payments;
be drafted with their intended audience in mind, and not be
needlessly complex or "legalistic"; and
be tailored to meet your business needs and to comply with
Murray Thornhill, director of HHG Legal Group, who often advises
small and large businesses on their terms and conditions:
"In our experience, the process of drafting your terms
and conditions can also be a useful exercise in covering issues
that businesses usually overlook."
For example, it is natural that your focus will be on the day to
day matters such as price and payment terms. However, terms and
conditions may also deal with passing of title and the Personal
Property Securities Register, disclaim your liability for delays or
failures outside of your control, protect your intellectual
property rights and enable you to recover debt collection and legal
"The exercise will provide you with important legal
protections which may not be obvious to the non-lawyer, but can be
covered in simple language." Mr Thornhill said.
Like insurance, putting these simple agreements in place from
the outset will put you and your business in the best position.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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