Solicitors Kerry Poole, left and Marie Therese, right, offer some handy tips for keeping the business wheels moving smoothly during these difficult trading days.

The terms and conditions of a business are often overlooked, but are vital to its health in the current economic climate.

Follow these top tips to help your business through the current challenges and make them standard practice in future:

Terms and Conditions of Business

• Review your existing terms and conditions to ensure that your business is adequately protected, alternatively put fresh terms and conditions in place

• Ensure the "Battle of the Forms" is won,  impose your terms and conditions at each stage of the contract formation process, especially when providing samples and quotes

• In the event that delivered goods are not paid for, ensure they remain your property by including a "Retention of Title" Clause within your terms and conditions

• Agree to the terms of payment before orders are placed, including both the time for payment and the right to charge for interest in the event of late or non payment. You have the option to charge interest for late payment of invoices either under the terms of the contract or under the Late Payment of Commercial Debts (Interest) Act 1998

Effective terms and conditions could save your business from becoming engaged in costly litigation.

Receiving payment on time

• Issue clear and accurate invoices on time and always follow them up
• Offer as many methods of payment as you can
• Send letters at predetermined intervals which:
  1. ask for written confirmation of satisfactory delivery of the goods/services
  2. indicate the amount outstanding
  3. demand payment in accordance with your terms

If you state that you will be instructing solicitors if payment is not received, make sure you do so and promptly.  Your credibility is key to you getting paid

• Always keep a record - record the date and outcome of all contact made with the debtor
• Be proactive and chase late payments, late payments and bad debts lead to liquidity and cash flow problems, and may even force a business into insolvency

Good credit control

• Currently every penny counts for a business
• Know your debtor - do credit checks, stick to credit limits and monitor the behaviour of your debtors
• If you are having difficulty in recovering what is owed to you seek assistance quickly

Dealing with outstanding payments

• Decide whether it is worth a fight:
• Consider your customer and, if they are key to your business approach the matter diplomatically
• Listen to your debtor and, if there is a complaint, be objective and resolve it  

If you decide to instruct debt collectors:

• Ensure you make checks before using an agency
• Find out what methods the agency uses. Maintaining business relationships and a good reputation are as important to your business as getting paid
• Remember that unlawful methods such as harassment could lead to you being liable and can constitute a criminal offence

Avoid the last resort

• Explain what steps you intend to take and try to reach an agreement. Recovery without legal proceedings is invariably the most desirable option
• Always try to have a meaningful dialogue with your customer to find out why the debt has not been paid.  If possible, consider offering instalments as a payment option.  If you have a good system for dealing with debtors, paying someone else to collect your debts will hopefully be a rarely used last resort

Managing credit and cashflow in tougher economic conditions is as important, if not more, as obtaining sales. Make sure you take the time to deal with this critical issue.

Lastly, make sure that the payment terms you agree with your suppliers match, as far as possible, your own cashflow forecasts. If your suppliers are reducing the credit period available to you then you will need to try to do the same with your customers.

For further information please contact Kerry Poole on 01322 623700 or email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or Marie Therese on 01892 701363 or email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it