What are your 'Terms of Trade'?

Your business’ Terms of Trade tell your customers the conditions of doing business with you. They detail goods and/or services to be provided, how long quotes are valid for, price, and when payment is due. For any business where payment is not immediate cash across the counter, clear terms of trade can help minimise and prevent bad debts.

Make sure your terms of trade are geared to your business: whether you supply goods and/or services to consumers in a retail environment; to other businesses as a commercial supplier; or a mixture of both. Small businesses can often fit their terms of trade on an A4 sheet of paper. Larger businesses or businesses that deal in big ticket items may have more complex terms of trade.

Use every means possible to communicate your trading terms clearly to customers. Print them on the reverse side of your order forms and credit applications. Put them on your website, invoices and statements. Some businesses will go a step further and seek a terms of trade agreement with customers. With an agreement, you have not only disclosed your terms of trade - your customer has also agreed to them.

Your terms of trade are fundamental to your debtor management. When calling customers who owe you money, remind them of your terms of trade and use that to start the conversation. (And smile).

If you’re not sure your terms of trade are fit for your business, please ask us to go through them with you.