Why you shouldn't do Business without Terms and Conditions?

terms and conditions


When setting up a business there are hundreds if not thousands of tasks of varying size that need to be done or considered. When you haven’t even got a client yet it is hard to consider that you need good terms and conditions. Many entrepreneurs think those sorts of things can wait till later.

However, setting up good terms from the beginning means that you aren’t caught out later when you do start landing your first clients and sales. Here are the top things you need to know about setting up good terms and conditions and the impact it has on your cashflow:

1. Protect your business

By outlining clearly what you will and won’t do and what you expect from the client you reduce uncertainty and misunderstandings. You need to cover yourself so that clients can’t go back on their word. Without having something in writing there is no proof of your agreement. Just imagine if you had been commissioned to do a job, you had bought supplies to do that job and then the customer pulled out. If you don’t have any terms and conditions to cover this then you may be left holding the supplies and with no recourse. An event like this early in your business can be crippling to your cashflow.


2. Be clear

Being clear on money matters can affect your cashflow. The client may think that they will pay you at the completion of the job, however, you may want the customer to pay upfront or make progress payments. This can impact your cashflow as you will need to pay for materials and staffing costs before you have received any money.

Good terms and conditions also handle the situation of the customer paying late. In your terms and conditions you can stipulate a late payment fee.


3. One Size Doesn’t Fit All

It is important to have terms drawn up specifically for your business. You can’t use the terms and conditions for other people’s businesses. Make sure that you get a lawyer to draft your terms for you. If you do them yourself or you copy someone else then you may find that what you intended it to mean and how it is interpreted by the law is different. This can mean that your terms don’t stand up if challenged in court.


4. Make sure you include

The terms and conditions should include a clear definition of the product or service which you are going to provide, the payment terms, any guarantees or warranties that you will offer and the timeframe for delivery of the service or product. It should also include what happens if one or both parties wants to end the agreement.

There are also some legal requirements around what company information should be included on both - the terms and conditions and the invoice.

If you have concerns over your current terms and conditions or don’t have any we recommend that you seek professional advice.

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About Author

Kelly Morgan
Kelly Morgan

Kelly Morgan has over 25 years experience as a Chartered Accountant and is a Senior Client Partner at Azure Group heading up our Business Accounting and Accounting & Assurance divisions. Kelly is passionate about working with business owners. By working closely with her clients, Kelly helps them to maximise the opportunities in their business and assist them to achieve their goals.

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