DO YOU CONFIRM YOUR CREDIT TERMS IN WRITING?
January 8 2004. The Better Payment Practice Group (BPPG) urges businesses to set an urgent New Year resolution to confirm their credit terms in writing to customers BEFORE they start trading with them, to avoid late payment heartache.

In a poll conducted on the BPPG website during November, nearly a quarter of the respondents declared that they never confirm their credit terms in writing with customers.

Agreeing terms of trade credit ensures that customers know when they will be expected to pay and provides an important opportunity to define any penalties that will happen as a result of late payment, such as exercising one's right to interest.

A hidden danger in not agreeing terms with a customer is that the customer may be able to impose their terms on the supplier. There is legal precedent that states that the last party to present their terms before the goods or services are supplied is the one whose terms are applied to that contract.

Commenting on the research, Roy Ayliffe, BPPG member representing the Chartered Institute of Purchase and Supply, said: "Businesses are shooting themselves in the foot by not agreeing terms upfront. It leaves their cashflow open to the abuse of late payers. Agreeing terms must be top priority for all businesses and should be as much of a part of the contract negotiation process as delivery details, service and price."

Businesses wishing to know more about this topic can look at the BPPG website, www.payontime.co.uk for free advice on developing their own credit terms.