Terms and Conditions – the importance of this contract with your customer

 Photograph: J.R. Bale / Alamy/Alamy

Photograph: J.R. Bale / Alamy/Alamy

Many of the small businesses we mentor here at Cornerstone, even those that are more established, have not defined written terms and conditions (T&Cs) for the sale of their products or services.

If the business is based on strictly cash sales this may not present an immediate threat.  But if the business is based on any sort of extended, quoted service, or work done on credit, then it becomes very important that written T&Cs are agreed with the customer at the outset. These should most particularly include payment terms.

Not getting paid in a timely manner, or not getting paid at all is one of the commonest causes of cash flow problems for any business, but particularly a small start-up. The ideal is to secure at least part- payment in advance of performing the work. Extended work can be split into phases with payment in advance, or on completion of each phase. The aim, always, should be to avoid or minimise time and money invested before payment. Such arrangements need to be defined in written T&Cs and accepted by the customer ‘up front’.

Formal T&Cs can also address potential issues like liabilities, claims for faulty goods or workmanship, late cancellation, or changes to specifications.

Terms and Conditions of Sale are your contract with the customer. They should be easily visible, so: built into, or appended to written quotations; published on your website; printed on your invoices. It should be clear that asking you to do the work shows acceptance of your T&Cs.

A solicitor can be enlisted to draft, or to check your T&Cs, and a variety of models can be found online – for example The Guardian Small Business Network recommends Clickdocs – but a small business owner may choose to design his / her own having studied the T&Cs used by other, similar businesses. They do not need to be long and complicated, and ‘plain English’ is best. You don’t need to anticipate every eventuality, but at least address the important ones.

Any T&Cs are probably better than no T&Cs.

Leave a Reply