Want to know how to protect your business? Setfords commercial litigator Verona Cocks gives her top 10 tips

Many businesses which end up in a dispute could have avoided the conflict if they had invested more time reviewing their trading operations and taken the right advice. So to help save you time and money here are my top ten tips on how to protect your business.

    1. Review your trading documentation. What does it say? Purchase orders, acknowledgement of orders, delivery notes, invoices, records of conversations and correspondence should all be kept in order. If you are trading on the internet have you kept and backed up electronic records of the same? If a dispute arises these documents may be invaluable.
    2. Do you have terms and conditions of business? Where are these contained? To be effectively incorporated into the trading relationship they need to be contained in a contractual document and/or brought to the other party’s attention before the contract is concluded. A signed agreement is optimum but not always pragmatic. Invoices and delivery notes containing terms may not be sufficient to incorporate them, as these are considered post contractual documents, unless you have a previous consistent course of dealings.
    3. If it’s online trading the same principles on incorporation apply. The most common method to establish incorporation is to make the buyer click or tick acceptance of terms before they can complete the order. If your customers are mainly consumers as opposed to other businesses avoid references to any declaration that the consumer has “read and understood” as this is considered to be an unfair term. Rather instruct the customer to read them carefully before accepting them.
    4. Useful terms in a business to business relationship, (as opposed to business to consumer), include an effective retention of title clause which may allow retrieval of your goods should your customer become insolvent. Other terms limiting liability for defective goods or services in relation to description, quality and negligence (other than death and personal injury), should be considered.
    5. What are your terms of payment? Do you have a clause stating your statutory right to interest on late payments? Whilst this right arises automatically in commercial contracts, setting it out in your terms shows your awareness and can act as a deterrent. Incentivise early payment with a discount.
    6. Are you clear as to the identity of your customers? Are they sole traders, partnerships or limited companies? If it’s the latter and cash flow is an issue think about asking the directors for a personal guarantee. If your customers are consumers review your terms carefully because some may be considered automatically unfair and unenforceable. The Competition and Markets Authority (“CMA”) has issued guidance to businesses following the Consumer Rights Act 2015 (“CRA”) coming into force.
    7. Check your customers’ credit worthiness and monitor it particularly where there are issues arising. Introduce credit limits for new customers and look at reducing credit and / or terms of payment for slow payers.
    8. Look after your existing customers by talking to them, building a relationship and making a gratuitous gesture where you can, however small. A large proportion of customers are lost because they no longer feel valued. A competitor who has been able to drop their prices may look more attractive in such circumstances.
    9. Invest in good customer service and effective credit control procedures. Talking to debtors at an early stage may facilitate a payment plan and ultimately strengthen the business relationship. A reputation for fair dealings can only enhance your business but don’t be afraid to take action to recover sums where it’s cost effective to do so.
    10. Last but not least if you are experiencing difficulties with your customer of whatever nature, or financial difficulties yourself speak to your solicitor as soon as possible, it saves time and money in the long run.

For further information contact A. E. Verona Cocks, Senior Consultant Solicitor, at Setfords Solicitors. Verona offers specialist advice on all forms of business disputes, insolvency and alternative dispute resolution. Tel: 0203 8295 557 DD: 01209 708 651 e: vcocks@setfords.co.uk

Please note that these guides are for informational purposes only, and do not constitute legal advice. You can contact one of our expert consultant lawyers using the form below.