Are your company's Terms of Business in good order? Do they help your credit and collections staff to reduce debtor days? For instance, do they properly reflect recent Late Payment legislative changes?
As specialist lawyers in the credit industry, we find that most terms of business do not maximise cash collections, nor do they minimise legal costs.
Typical clauses we recommend for review include:
Payment of collection costs
You can have a term that entitles you to recover all your costs of collecting a debt. This enables you to:
- Recover the costs of PreLegal action, an LBA, etc
- Recover all your costs of a Small Claims Track case
- Recover higher costs in Fast Track and Multi Track cases
Cancelling credit periods
You can have a term that:
- provides for all credit periods to be cancelled when any invoice is overdue and
- entitles you to claim for work that has not been completed and invoiced
Interest on overdue debts
Terms providing for interest on overdue invoices were useful, but now it is much better to rely on the Late Payment of Commercial Debts (Interest) Act 1998.
Law and Jurisdiction
Two clauses are helpful where you have customers outside England and Wales:
- a clause providing that English law shall be the law of the contract
- a clause giving the English courts jurisdiction over any disputes
Back
