A detailed and thorough credit application with strong terms and conditions is the solid foundation that companies need to safeguard their business.
Solid terms and conditions are the first tool in your arsenal when attempting to recover debt from debtors. If your T&Cs are filled with irrelevant and incorrect clauses, then it’s going to make things a lot messier when you have a client or customer who isn’t paying.
At Optimum Recoveries, we offer all new clients a complimentary review of T&Cs with our team of solicitors. Through our years of experience conducting these reviews, we have come across a number of common mistakes that companies make in creating their own terms and conditions. In this article, we’ll look at some of the mistakes we see regularly, and why your company should be avoiding them.
1. Including the Wrong Legal Entity
While this seems like it would be an obvious mistake to avoid, we have come across numerous T&Cs which include the incorrect legal entity. This usually happens when companies copy and paste their T&Cs from an existing document online, instead of creating their own. Your company doesn’t have the right to collect a debt if the legal entity listed in your T&Cs is wrong, so don’t make the mistake of listing another business’ name.
2. Including the Wrong Jurisdiction
This mistake is usually caused by a lack of attention to detail, and not ensuring the information you have copied and pasted is relevant and applicable to your business .
The risk here is that you may be a Queensland-based business that operates entirely within Queensland. If you have the wrong jurisdiction listed – such as Perth for example – then the costs of recovering your debt are going to be significantly higher (and logistically harder) than simply seeking to recover the debt conveniently in Queensland.
3. Having Irrelevant Clauses
The final note in our trilogy of “do not copy and paste T&Cs” is making sure that all your clauses are relevant to your business, sector, and industry. For example, it’s going to look rather strange if your construction company’s T&Cs include clauses that are relevant to the health or food services industry. While these clauses may be well written and relevant to the particular industry, you can’t expect it to transfer effortlessly over to your company.
4. Poorly Worded T&Cs
T&Cs are legally binding contracts, not a gentleman’s agreement. As such, you want your clauses to be carefully worded and in plain English to clearly convey the terms and conditions that all parties are required to abide by.
5. Overly Confusing T&Cs
Likewise, if your T&Cs are filled with too much legal jargon, you run the risk of your clients not comprehending the information that has been detailed – or even being scared off. It’s unrealistic to expect that a layperson with no legal background will be able to comply with your terms and conditions if they aren’t written in easily digestible, plain English.
6. Include a Cost Recovery Clause
We see many T&Cs that do not contain a cost recovery clause however, this is one of the best defences you have against your customers and clients when they fail to pay. The reason we often receive against including such a clause is that “it will scare away people from signing”. We would say it is a far scarier prospect to have to chase a bad debtor, which can result in significant debt recovery and/or legal costs which you cannot recover. Why should you be further disadvantaged for your debtor’s behaviour?
Seek a Complimentary T&Cs Review from Optimum Recoveries
Terms and conditions are the foundation that Optimum Recoveries base our debt prevention, management, and recovery services on. When we start working for a new client, we conduct a complimentary review of their T&Cs to see if they are making any of the mistakes that we have listed in this article. If you would like to have your company’s T&Cs reviewed by our expert solicitors, then contact us today!
