Protecting your cashflow – the importance of your terms of trade

Terms of Trade are the terms and conditions on which a business sells goods and services to customers and on which they buy goods and services from suppliers.

These terms form the basis for the trading relationships for all businesses.

​If a business is the supplier of goods or services then it should have written terms of trade which:

• are professionally prepared;
• tailored to fit the business;
• reflect the terms on which it is prepared to supply goods or services to customers; and
• allow customers to easily understand their obligations.

 
A lot of businesses don’t take the opportunity to set the terms on which they do business which can mean they are left at a commercial disadvantage, or worse, a legal disadvantage if the transaction does not go according to plan.

It is important that the terms of trade are set and understood before any commercial dealings have taken place.

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