Economists are predicting tough times ahead.  Now is a good time to review or put in place terms of trade if you sell goods or services on credit.

“Terms of trade” is a business’ contract with its customer which we recommend contains provisions about:

• When payment is due. Also that it is made without deduction, set-off or counterclaim;
• The right to charge the customer default interest if payment is late;
• The ability to stop supplying goods or services if payment has not been made;
• Guarantees from the directors and shareholders of the customer if a company. This means they are backing their company’s obligations with you.   Also the ability to take a mortgage over the directors or shareholders home if the cusomter does not pay.
• The ability to retain ownership of the goods until they are paid for together with the ability to go and get the goods from where the customer has them.
• Exclusion or limitation of your liability or obligation to resupply the goods or services if the customer makes a claim against you.

There is no guarantee that payment will be made if you have terms of trade in place but it will definitely increase you chance of getting paid.    If you ever have doubts about whether a particular customer has the ability to pay you then the best approach is to get paid before you provide the goods and services.   Better to be safe than sorry.