Assure Global Plus’ CEO Michael Partis sat down with Kelly Hounsell from H Litigation in Brisbane to talk about how clearly establishing terms of payment is one of the best cost prevention measures should a business encounter payment defaults by clients.
Michael & Kelly discussed terms of payment documents – how they can save on fees and fights when facing payment defaults, why copy/ paste terms of payment are often more of a cause of stress than a prevention, and how to simplify the whole process to streamline debt recovery.
Many small businesses only address their Terms & Conditions documents when facing cash flow issues or unpaid invoices. Business owners often focus on their core competencies while neglecting administrative aspects, and this inevitably leads to financial challenges when unpaid accounts accumulate. This reactive approach is problematic because it involves not only legal approaches but a number of soft skills that it can take years to develop.
Well-crafted Terms & Conditions documents are preventative rather than curative. Though businesses prefer quick fixes when facing a single bad debt, properly developed T&Cs only demonstrate their value a few months down the road when they help facilitate swift collection of outstanding payments. Kelly’s experience here mirrors ours at Assure Global Plus – businesses typically become much more receptive to implementing comprehensive T&Cs after experiencing delinquent accounts.
Critical elements of effective Terms & Conditions include:
-Clear payment terms that specify when and how payment is expected
-Jurisdiction clauses that determine which state or territory laws apply
-Dispute resolution processes that establish how conflicts will be handled
-Security provisions where applicable for the business type
Many businesses make the mistake of using generic templates copied from various sources without understanding their implications. This creates confusion when legal action becomes necessary, as business owners can’t explain why certain clauses are included or how they function.
Cost recovery clauses require special attention, as courts in some jurisdictions (particularly Queensland) are increasingly scrutinizing them. Courts may reject cost recovery that wasn’t clearly established upfront or that appears speculative rather than reflecting costs actually incurred.
The ideal approach is to develop tailored T&Cs specific to your business operations rather than using generic templates. Working with legal professionals, like the team at H Litigation, to create appropriate terms can save significant time and money when collection becomes necessary.
You can check out the conversation between Michael & Kelly below.
