BUSINESSNEWS
Practical tips to
ensure you get paid
what you’re due
It’s hard enough winning new business at the best of times,
but ensuring you get paid what you’re owed and in a
reasonable time frame remains a problem for UK suppliers.
»»Shanti Shah, a lawyer
in the construction team at
commercial law firm, SGH
Martineau, explains what
businesses can do to improve their
chances of not only being paid.
“Delivering goods and
providing services before being
paid still relies heavily on trust
and unfortunately, there are times
when payment is not made.
“It now appears businesses are
more willing to take matters to
a dispute rather than pay when
pressed for payment by their
suppliers. This puts suppliers
at greater risk of not being
paid, if for example the buyer
becomes insolvent or disputes the
invoice.
Terms & Conditions
The actual content of T&Cs
will largely depend on what you
supply and how your services are
provided. While there is no hard
and fast rule for what your T&Cs
should contain, some points to
note include:
• Your own T&Cs should
be written in your favour
and you should seek to
have those terms govern the
relationship between you and
your buyer.
• Require money to be paid
up-front. This can be by
way of deposit to secure
the goods or services being
provided;
• If providing goods, include
an adequate ‘Retention of
Title’ clause and mark the
goods as belonging to you,
with your contact details,
so they are identifiable in
the event of for example an
insolvency;
• Include as a condition that
the buyer must keep the
goods separate from other
goods and/or must not use
them unless your written
consent is provided.
• Expressly say that although
risk passes, title to the
goods will never pass
to the buyer, unless full
payment is received and
that position is confirmed
in writing,
• Depending on the goods/
materials being supplied,
you may want to include a
mixed goods clause;
• Include a provision for
debts owed on one contract
to be off-set against other
contracts between you and
your buyer;
• Limit the credit facility
to your buyers to an
appropriate amount so that
you have control over your
exposure;
• Include clauses to ensure a
quick turnaround of events,
such as the buyer having
a set number of days after
delivery to inspect the
goods before they will
be deemed accepted and
payment becomes due.
98 » M AY 2015 » CL EARVI E W- UK . C O M
Be practical when
asking to be paid
In construction operations,
‘pay when paid’ clauses are
not permitted and in all other
circumstances, you should aim to
be independent of any payment
regimes linked to other contracts as
those timings and payment dates
were probably agreed to suit other
parties.
‘Not all companies
request part
payment up-front’
Not all companies request
part payment up-front, which
will expose them to more risk, so
asking for full or part payment
up-front should form part of your
standard procedures. If this is
not possible, then as a minimum
ensure you cover the cost of any
materials you have purchased.
Reduce your exposure to risk
by requesting payment (or the
balance) on delivery where the
goods/services can be inspected
- there is no reason to start by
offering credit. If necessary, agree
a proportion is paid on delivery,
with the balance paid shortly
afterwards.
To discourage late payment
send reminders and phone to
request payment before the
final payment date. Remind the
buyer of the interest that can be
charged and of other costs for late
payments; for buyers who can’t
pay, consider a re-payment plan.
Alternatives
There are many insurance
products available, like ‘credit
insurance’ which aims to cover
bad debts, but you need to assess
if such a policy is right for you
and should take advice before
purchasing one.
Depending on the size of an
order, suppliers should undertake
credit checks where possible
and perhaps obtain guarantees
from parent companies and/or
directors.
In conclusion
The problem for many
businesses remains balancing
long term good relationships
with clients built on credit terms
often in their favour, against
the shorter term gain of more
restrictive credit terms. However,
being firm from the start of a
relationship sets a precedent and
it is worth remembering that
ensuring payments are made is
cheaper than chasing outstanding
payments.
‘seek professional
advice when
needed’
These are a few suggestions to
help you reduce your exposure
to risk and to be paid in full or
in-part, but the key is do your
homework, understand who
you are contracting with and
seek professional advice when
needed.