Should customers sign a payment terms contract?

Should customers sign a payment terms contract?

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Do I need a payment terms contract for customers?

From a practical point of view, having a mutual understanding of when payments are expected can only be a good thing for your business.

For a small business, cash flow problems can be crippling if customers place orders but pay at a much later date.

If this is a large customer with ongoing bulk orders, it might be an idea to formally set out a payment, discount and interest rate plan to ensure continued business and a good customer relationship.

From a legal point of view, the National Credit Regulator requires credit providers to provide upfront information about the cost of debt, and the timing of payments, before a credit agreement is entered into.

Before selling goods on credit, it would be a good idea to look at all the related obligations of the credit provider.

 

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Nicola Ross
Nicola Ross qualified as a Chartered Accountant in 2010 after completing her articles at RSM Betty & Dickson (Johannesburg). Nicola continued on at the firm as an Audit Manager and has held this role, as well as the role of Technical Manager, for three years. She has audit and technical experience in a number of industries, including construction, retail and property, and is currently completing her Masters in International Accounting.
  • Bongani

    so if my client was on cash basis and fails to pay for now 60 days do I have a right to inform them that I will be charging them 2% interest on more than 30 days outstanding and penalty related in collecting outstanding invoices. This is guided by the NCA.