Owning and running a business can be a fun and rewarding experience in and of itself, but what many rookie business owners don’t realize is that debt collection can be a pain in the neck when they are not fully aware of the ins and outs.
Avoiding Client Debt
Money management and cash flow are an integral part of owning a business. Money comes in and goes out, but it isn’t as simple as that. There are payables and expenses that need to be addressed such as rent and employees’ salaries. Not every cent that the business earns goes straight to your pocket. In fact, business owners are well aware that the person that gets paid is the owner themselves!
If cash flow is inconsistent, you will eventually have to deal with mounting debt from clients who refuse, or forget, to pay on time. If this isn’t your forte, you might need to hire a debt collection agency in Gold Coast sooner or later.
So, how would you deal with this in the first place?
Terms and Conditions are Important
Whenever a deal goes awry, what do you do?
Well-meaning business owners know that one of the most important documents to hold is a terms and conditions contract. A contract between yourself and a client helps make transactions run smoothly.
How to Write A Terms and Conditions Document
Because this document is legally binding, seeking the advice of a lawyer or a similar professional will be highly beneficial as they will be able to draw up a contract that will be fair to both parties.
However, this shouldn’t stop you from drafting one right now. You may show your draft for consultation when you’re done.
- Don’t complicate things. Keep the document simple and straight to the point. A good reason why your contract should be kept short is because potential clients only want their questions answered in the document. There is no real need to use unnecessary words and lengthen the contract. Remember that this is a written agreement between two parties, not a college essay. Being straightforward also shows the buyer that you have no reason to hide anything from them and this will give the impression of being a trustworthy supplier.
- Explain when needed. In every industry, there will be jargon unique to it. It is wise and in good taste that you provide a thorough explanation of terms that may be new to the client. You may insert this section at the end of the contract.
- What the price includes. This is one of the most tedious sections of the contract because you need to be specific about what is included in the price listed. Alternatively, you should also include what is not. If additional charges are to be warranted for any changes in the order, make sure to include this as well. Details such as shipping and handling costs are to be listed too.
- Don’t make false claims or misleading statements. Transparency is of utmost importance in a Terms and Conditions document. Be honest and avoid making statements that may confuse or mislead the client. This will not only harm the transaction but ultimately your business as well. Remember that this document is legally binding and you could be prosecuted under the Australian Consumer Law.
- Refunds and returns policy. Should your client deem your service or product unsatisfactory, outline your refund and returns policy in your contract. Make sure to explain what state that product should be in if they intend to ask for a refund or want to have it replaced. For example, if any damages happened during shipping, you should state that you won’t be held liable for this. This is especially important if you are using a third-party courier service. Policy on Customer Satisfaction and Quality of Service or Goods: This section of the contract should assure the buyer that you are offering quality goods and services. You are also committed to providing customer satisfaction.
- Limitation of Liability Clause. While you aim to provide what your customer wants, there are limitations to what you can and cannot do. This section is best written by a professional as it will protect you and your business should an issue arise.
As you can see, having your own Terms and Conditions is very helpful in running a business. It will be beneficial in the short and long terms as it gives assurance to both you and your client.
Should a customer pay late, or refuse to hold their end of the deal, then this document can be used to demand payment and even be presented in the court of law. A Terms and Conditions contract is put in place to protect the interests of the buyer and seller.