The works of a small business owner are rarely ever done.
You spend all your time gaining the qualifications, then getting your product to the point that you’re ready to sell or offer it. You do so by starting with a small customer base, maybe then moving into hiring some people. That means you’re going to have to manage them while at the same time trying to increase your cash flow and build and grow your business as a whole.
With so much to think about short and long-term, it can be quite easy to forget one of the most important things: to set clear terms and conditions of business.
While they mightn’t sound all that important initially (after all, who the hell reads terms and conditions), for business owners they are absolutely vital.
Reasons for Clear Terms and Conditions
If a business owner doesn’t have a clear set of terms, it leaves things open for customers (and late payers) to dispute what they owe.
“What do you mean I have to pay for that? You never said I had to.”
If small business owners had a dollar for every time they’d heard that, well… their businesses wouldn’t be so small if you get what we mean.
Customers are able to dispute what is owed and by when because, without terms and conditions, things are open to interpretation. Things aren’t clear. And when things aren’t clear, people can take advantage.
Clear terms and conditions can also limit your liability when (God forbid) things go awry, and they help determine exactly who owns what in a commercial agreement.
What Should Your Business Terms Include?
In broad strokes, your terms and conditions should generally spell out:
- What you’re going to offer (your good or service)
- What it will cost your customer
- By when
- The payment methods you accept
- And what happens if your customer doesn’t pay; i.e. your debt collection policy.
While all of these things are significant, spelling out what you actually offer is arguably the most important. This will basically be your scope of work for your customer. Get this signed off before anything else takes place, otherwise you may find yourself in a spot of bother.
When it comes to the money side of things, if you don’t require payment upfront (some business owners do, some don’t), then you’re going to be offering credit terms. You’ll then be giving your customers the right to pay within a week, or two, or several – that part is up to you. But spell it out clearly.
When it comes to your debt collection policy, this will generally spell out your practices in relation to recovering unpaid debts. It will explain the activities – emails, phone calls, letters of demand, third parties (like Late Payer List) – that you plan to undertake should payment be late.
Just make sure that things are clear, the language you use is simple, and there’s no possibility of misinterpretation.
That’s All Well and Good, Late Payer List, But How Do I Ensure I Get It Right?
Okay, you probably didn’t go through Harvard Law so it really does pay to get some professional advice when it comes to setting your terms and conditions of business.
While there’s loose templates that you can find (and you can probably inherit some second hand from your small business-owning mates), there’s no cookie-cutter for terms and conditions.
Just as every business is different, so too should be your terms and conditions.
One thing is for sure however, the finest print can make the biggest difference. And if you ever get into a dispute with a customer, you’ll be thanking your lucky stars that you took the time to set them up correctly.