Member Article

Accuracy of terms vital to getting paid

Euler Hermes launches new service to help SMEs mind their Ts & Cs!

Euler Hermes Collections, the UK’s largest specialist business-to-business (B2B) collections agency, has launched a new service that offers its customers free preliminary legal advice on their business’s terms and conditions to help them minimise the risk of contract disputes experienced by many small businesses that invariably lead to non-payment or worse, insolvency.

Terms and conditions can be the stumbling block over which many SMEs trip, causing payment disputes with customers and suppliers that can lead to loss of contracts. Euler Hermes has noticed a trend with its customers complaining that where written, complex and confusing terms and conditions can lead to issues further down the line.

Phil Mercer, Head of Euler Hermes Collections UK, says that whether you are bringing a new customer on board, or starting to deal with a new supplier, accuracy in terms and conditions is absolutely critical to maintaining a healthy working relationship:

“Should a dispute arise over whether an order has been delivered or a service provided and the small print does not back up what you believed to be the understanding you have to trade, then you could be liable for thousands of pounds which could put your company at risk,” he says.

“Conversely, correctly drawn up business terms and corresponding sales or supply documentation can ensure that invoices are treated with priority by customers and can ease day to day business, which is why Euler Hermes has launched the new Terms and Conditions Review & Re-Draft Service.”

The first stage is a free ‘Preliminary Advice Service’ – a 30-minute conversation with a qualified lawyer – that acts as a quick overview and health check of current arrangements that will expose if a business is at risk.

Should it be required, a subsequent ‘Review and Redraft Service’ can be arranged at a comparatively low fee. This will include a full assessment of existing written terms and documents of trade along with advice and recommendations. Lawyers can also provide a set of terms in line with current legislation in B2B business.

“These reviews will guarantee that terms and conditions act as a written record of oral agreements and ensure they are in your favour when things go wrong,” Phil concludes.

Ten Reasons for having your business terms and conditions reviewed:

1. Tailor your terms and conditions to your business needs. No two sets of terms and conditions are ever the same because no two businesses are ever the same, so it can be fatal to borrow another business’s standard terms and try to make them fit your business. To protect yourself you need to have them drafted professionally.

2. Check that your terms and conditions are free from errors and legal traps for the unwary. Believe it or not, about 50% of standard terms and conditions will contain grammatical errors, misprints or have words missed out. Ask to have your terms and conditions supplied on disk so that you know that you’ve got them right.

3. Ensure your terms and conditions apply to your contract of sale or provision of services rather than those of the customer (which will probably be less favourable to you).

4. Get rid of legal jargon. Look for a lawyer whose documentation is commended by Clarity – the legal plain English campaign.

5. Ensure your retention of title clause is watertight. If customers fail to pay for your goods it is possible to take repossession of the unpaid goods in certain circumstances but only if you have a well-drafted retention of title clause.

6. Protect your business from unlimited liability for consequential loss. Under the law of contract your liability for breach of contract may be unlimited damages unless you restrict your liability by a properly drafted term. This liability is unlikely to be covered by any product liability insurance and so it is essential that every business limits their liability in this way.

7. Overdue Accounts - Increase the rate of interest that you can claim when debtors fail to pay. If you include a properly drafted interest clause in the contract you can claim default interest of up to 8% over base rate. Why not claim it?

8. Recover your collection costs for enforcing payment of unpaid debts from defaulting customers on an indemnity basis. This means you have the opportunity to claim back the full costs that you have to pay your collection agents and lawyer for enforcing recovery of the debt.

9. You have the opportunity to recover Euler Hermes Collections fees that you have had to pay, if your terms and conditions contain the appropriate clause.

10. ENJOY THE SECURITY OF KNOWING THAT YOUR TERMS AND CONDITIONS PROTECT YOU AND YOUR BUSINESS AS MUCH AS THE LAW WILL ALLOW.

For further information, call 0800 197 1407 or email collections.newbusiness@eulerhermes.com

This was posted in Bdaily's Members' News section by Alex Simmons .