I first met Saul, who has a landscaping business in Hillary's, some 4 years' ago. I explained to Saul at the time how Terms of Trade would provide his business with consequences to impose on to his clients, should they refuse to pay him or even refuse to pay him on time. I also told Saul that with correct Terms of Trade in place the costs of Debt Collection could be passed onto his debtor. In other words businesses with correct Terms of Trade in place can qualify for free Debt Collection.
Saul was fairly adamant at the time that he'd been running his business successfully for over 2 years, and had never encountered difficulties with his clients paying him. My response to him was â€œThat's fantastic, now is the perfect time to put proper Terms of Trade documentation in place, as the Terms are not retrospective. They need to be there before there is a problemâ€. I used the analogy to make things very clear to Saul, that it was like saying â€œI've lived in this house for over 2 years and have never had a problem with fires, so I don't think that I need fire insuranceâ€. I reminded Saul that if his house caught on fire tonight, it wouldn't do him any standing on the footpath phoning his insurance company, as the fire brigade were pulling away.
Terms of Trade are â€œthe insurance policyâ€ on your cash flow. They need to be there before your first customer does the wrong thing by you. The Debt Collection process too, only has leverage when it is backed up by the consequences contained in the Terms of Trade.
Well, I really wasn't surprised last week to receive a call from Saul telling me that not only had a client defaulted on him, but the client has in fact gone into liquidation. I was tempted to ask him if he remembered my advice of a few years' ago?! This is not an unfamiliar scenario and one which I come across from time to time.
We have now set Saul up with correct Terms of Trade and he has peace of mind too in knowing that if his clients don't pay him on time EC Credit Control will take over the Debt Collection, on-charging the costs to Saul's clients.
It is essential to ensure that your business has correct Terms of Trade in place now.