The necessity of a T&C

Unlike the T&C often attached to a website or app, the T&C between a small business and its customers is much more personal. It is the contract that sets out rules for the relationship. While it may contain general guidelines applicable to all customers, it may present details more specific to a particular customer--like prices and deadlines.

You make a written T&C available to your customers for two main reasons:

• To assure your cash flow, and
• To encourage mutual understanding

Assure cash flow

The area where a T&C is most vital is with payment policies. Terms indicate important details such as when a customer pays, how much, any late payment penalties, and collection costs if the matter escalates.

It is an unfortunate reality that when it comes to bill paying, smaller businesses end up at the bottom of the pile. You can strengthen your position with the right payment terms in your T&C.

This can include prepayment deposits, monthly subscription costs, and even interest on late payments. Without these items being addressed in a T&C, you cannot enforce these terms and may end up working hard or providing products without a guarantee of payment.

Mutual understanding

Misunderstanding is possible in all contractual relationships. Imagine the disaster if you expect to receive payment for materials before building a product but the customer believes payment is not due until delivery. If you do not have the prepayment terms in writing, it makes it difficult to enforce terms to your best interest.

The same is true with service or product quality, deadlines for completion or delivery, and returns and refunds. If a client can review these terms before purchasing your product or service, everyone enters the transaction informed. This prevents the misunderstandings that can lead to dispute resolution procedures later.

Drafting the T&C

Here are the essential provisions you want to include and how to make them available to your customers.

Essential provisions

Not all of the following provisions may be relevant to your business, but they are a good place to start when considering what you need for your T&C. Examples here include a sample from a freelancing website and one of the few small business T&C agreements available online.

Clear description of products or services

Every T&C between a small business and its customers must include a description of the products and services. It can also include services that are not provided with a contract.

Elance offers T&C templates for freelancers. These are helpful when creating the same for small businesses since freelancers take many of the same risks.

Here is how the freelancer T&C template suggests describing products and services: