Debt Collection Strategy and Brexit
Debt Collection Strategy and Brexit: Reviewing your T&Cs is a must
As part of your Debt Collection Stategy in line with Brexit, Businesses need to review their Terms and Conditions of Sale.
One of the key elements of running a business is to ensure that you have a robust and effective set of terms and conditions (T&Cs). Yet many organisations overlook the importance of this aspect of the business, settling for vague or ineffective terms and conditions or even failing to create any.
You may call them T&Cs, business terms or terms of sale, but the principle remains the same. Your T&C document sets out the defining principles and rules of all your business transactions with clients. So as Brexit gets underway, there is no better time to take a closer look at T&Cs and why they are so important to you and your business.
The main purpose of T&Cs is to offer protection for your business. They lay out in writing what is expected of customers and suppliers. In the event of a dispute, it is your T&Cs that you will rely on. That’s why it is vital to ensure that your T&Cs are precisely tailored to your business, rather than simply a generic template. If you are in doubt, have a legal expert check them out in detail.
Strong business relationships depend on mutual understanding. All parties need to be clear about what is expected of them and what they can expect from others. This includes a clear understanding of when payments should be made, and what can happen if payments are delayed. By having a clear set of T&Cs you can avoid misunderstandings and upsets, minimising the disruption to your business relationships if you need to take debt recovery action, such as engaging a debt collection agency.
In the case of recovering late payments, whether you are doing so yourself or through a debt recovery agency, it is much easier to secure the money you are owed if there is written proof of an original agreement. If there is no contract for a particular transaction, then a clear and watertight set of T&Cs, clearly displayed on your website, can fulfil the same function. Legally, if a customer does business with you, they are agreeing to your T&Cs, offering you both protection and a sound legal basis for you to recover the debt.
The UK being out of the EU has huge consequences of exporters being able to recover cross-border debts as expediently as before. Check here for more information on Brexit. EU Cross-Border laws on reciprocal recognition and enforcement of judgments are no longer in force and we are in a no man’s land with our close trading partners when in comes to enforcing our UK judgments abroad. As a result, special attention needs to be placed on your jurisdiction clause so you have full protection and the best opportunity to recover your outstanding invoices from your late or non-paying EU customers.
Late Payment Interest
In B2B transactions, all businesses are entitled to claim both recovery costs and interest on late payments, though very few small operators do so. In some countries (e.g. France) mentioning the Late Payment Legislation and sanctions applicable in your T&Cs is a condition of late payment compensation being awarded by a judge. If your T&Cs clearly explain that you will impose a set recovery cost and late payment interest when debt is overdue, you will be in a strong position to claim these payments.
A clear and effective set of T&Cs can provide you and your business with protection and provide a strong foundation for the recovery of debt. To find out more about how to recover late payments and how to ensure your T&Cs are watertight, get in touch with us today.