Why are Terms and Conditions important to your business? 7 points to consider when putting terms in place

Do you have terms and conditions? Have you thought about terms and conditions? Do you know the impact terms and conditions have on your business? Ever wondered why big businesses always have terms and conditions? What do they know that you don’t? How are terms of business complicated to write? Are they complicated to write? What should you include in them? I’m not going to be answering all of those questions today, but what we are going to be covering is why it’s important to have them. There’s nine reasons that I think it’s really important to have terms and conditions. You may have some different ones. If you have, let me know. Drop me a comment.

Importantly Terms remove uncertainty

Importantly Terms remove uncertainty and remove confrontation.

1 – Terms bring certainty for everyone

I’d say terms and conditions are important because it provides certainty to all the parties involved. Normally, there’s two parties, a supplier and a customer.

For the supplier, it gives certainty of what they’re providing it when they’re providing it when they’re getting paid.

For the customer, it provides certainty of what they’re engaging the supplier for, when they’re getting that engagement, when they’re expected to pay, how they’re expected to pay, and what the consequences are of not paying.

If you don’t have those set out clearly in your terms, then there’s still area for dispute.

2 – Terms minimise disputes

Talking about disputes, having a written contract minimizes legal disputes. You have a written agreement with your customer.

There’s none of this I thought you said that. I interpreted the way you said that as this. There’s none of that. It’s clearly defined.

By having it in writing, it will help you should you ever need to go to court. By having written terms and conditions, you cover off every little detail.

When you’re talking to someone, it’s very easy to think about the big facts, the what, the why, the when, the where, the how. It’s easy to forget the things like the liabilities, the warranties, the payment method.

All the little things that when you’re talking to someone you might be able to forget about, if you have written terms and conditions, you can review those terms and conditions before you send them out and make sure that it’s accurate for everybody.

3 – Preventing Breaches

If you have written terms and conditions, it can help prevent breaches. If you’re a logo designer, who retains copyright when the invoice is paid? Do you keep it? Do you pass it on to the customer?

If you’re a website designer whose liability is it to ensure that any copy is free of copyright, that all pictures are paid for and can be used?

If you’re putting on a workshop, if you say please do not record this and someone records it, what’s the consequences?

If you have written terms and conditions, these will be clearly defined and you can pursue people for breaches of contract.

4 – Clear Expectations

It sets out clear expectations for both parties. This is very similar to certainty apart from the fact that you can make sure your terms are quantifiable and measurable and everybody knows exactly what’s expected.

Having a decent set of terms sets you above the rest for your customer service. You’re building that trust relationship with your customer from the very beginning. Your customer knows what to expect from you.

Your customer knows what they’re going to get from you. Your customer service, your commitment to your customer, is set out from the very beginning.

If you deliver on that promise on that customer service, how amazing does that make your company look?

5 – Legally binding legislation

As we touched on in point two with minimizing legal disputes, it also sets out which county’s law the term is abiding by.

If you’re based in England and your customer is based in Scotland, which court system, which legal system, do any disputes go through?

By setting this out, you can get that clearly defined.

6 – Cashflow

A set of terms will also help your cash flow because you’re setting out from the beginning when you expect to be paid.

If the customer wants to change when they’re going to pay you, then they need to do it in writing.

There are some companies that won’t pay to your terms. They will only pay to their terms. That’s fine. Alter your terms.

Acknowledge that some people are end of month, following month of receipt of invoice, which depending on when you invoice can be up to 90 days.

That’s not a problem because you’re aware about it up front. You can put it in your cash flow forecast.

7 – Customer Service

Alongside customer service, by having a set of terms up front, you’re cementing that relationship. You’re ensuring that the relationship between you and your customer gets off on the right foot.

You’re ensuring that your customer knows what to expect from you. You’re ensuring that you know what to expect from your customer.

If your customer isn’t happy with your terms and conditions, consider if they’re actually the right customer for you.

Build that relationship. Build that trust right from the start.

Summary

I hope you understand now why having written terms and conditions are important for your business. It takes away any ambiguity of any conversation.

Always have any amendments made in writing agreed by both parties.

I hope you found that useful. If you’ve got anything else or any questions on that, don’t hesitate to contact me on twitter, facebook or subscribe to my YouTube Channel.

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5 Comments

  1. Bill

    I wanted to thank you for this great read!! I definitely
    enjoyed every bit of it. I’ve got you book marked to look at new
    things you

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