In the recession more than ever any well run business needs to ensure that they are getting paid on time. Cash is king and to get your money in your bank account at the earliest opportunity, you need really clear terms and conditions. In particular, you should:
- Make sure that it is your terms and conditions that govern the performance of the contract – not those of your client or customer.
- Make clear when payment for goods or services is required – it's well worth checking this. You may find your current payment terms are far too generous. It's not uncommon for businesses to state payment is due 30 days after the end of the calendar month when the invoice was sent – that could mean a delay of up to two months before you can even chase for your own money . Reducing your credit period to perhaps just 14 days from the date of invoice could make a huge difference to your cash flow.
- You have a legal right to charge interest on overdue accounts – it's always good however to include details of such interest charges in your terms and conditions.
- Don’t rely on a verbal contract – it might prove binding.