Standard form credit account contracts: Why your business ought to have one

Standard form credit account contracts: Why your business ought to have one

If you are considering putting a standard form credit account contract in place for your business (or updating an existing one) which sets out the terms on which you will supply goods or services to your customers, then you should read on.

A well drafted contract that is customised for your business should clearly establish the rights and obligations of the parties. By extension, it should lessen the risk of your business not getting paid, as well as reducing the likelihood of future disputes arising in relation to the agreed terms of the sale. Think of a well drafted contract as an up-front insurance policy. A fairly ‘typical’ contract for a small business supplying goods or services on credit can generally be drafted for between $1,500 – $3,000 plus GST. Further, once you have the contract document you can then use it for every new customer and simply add in any ‘special conditions’ which may apply to a particular contract.

If you’re a bit ‘old-school’ and still doing business on a solely verbal basis, or perhaps you are providing your customers with a simple written quote giving the price and a brief description of the work to be done or the goods to be supplied, then it may well just be a matter of time until you have a bad debt cut into your profits or a nasty contractual dispute flare-up and take up hours and hours of your time, not to mention the associated stress and pressure. Perhaps that has already happened to you. Whatever your current practices are, putting an up-to-date contract in place should be on your list of things to do. After all, have you ever purchased goods or services from a large successful business and not been subject to their terms and conditions? There are good reasons why large successful businesses use standard form contracts. These reasons include a reduction in the incidence of disputes arising in the first place and importantly, tipping things in their favour when a dispute does arise. In other words, where a well drafted contract sits in behind a debt dispute then the chances of being able to successfully sue on it to enforce payment are significantly increased.

In summary, Austral Legal focus on drafting quality contracts that are customised for your individual business, at a cost-effective price.

Generally speaking, once we have a good understanding of what you are wanting to achieve and how your business operates, we expect to be able to provide you with a fixed fee option so that you know what your legal fees will be up-front for us to draft a suitable contract for your business to use in an ongoing capacity.

If you have read this far then we recommend that in the first instance you discuss your situation with us in our SmartMove initial 30-minute discounted consultation, which we offer for $80 and which can be booked through our website or by simply getting in touch. Don’t wait – your next customer could be your next bad debt.