The terms-of-trade talk

When to have this conversation

The terms-of-trade talk is overdue whenever a client trades on a handshake, a quote with no conditions, or terms they have never revisited. It is especially timely after a bad debt, when the pain is fresh and the lesson is obvious, or when a client is taking on larger customers or extending more credit.

It also fits naturally at the start of a new financial year or a periodic review, when the client is already thinking about how the business operates rather than firefighting a single account.

How to open it

Position strong terms as the client's own safety net, set before they ever need it. Avoid making it sound like paperwork for its own sake.

• 'Your terms of trade are the rules you fall back on when a customer won't pay. Right now I'm not sure you have much to fall back on — shall we fix that?'
• 'After that last bad debt, this is the kind of thing that would have made recovery far easier. Worth getting in place before the next one.'
• 'You're taking on bigger customers now. Bigger customers mean bigger exposure, so your terms need to do more work.'

What to say (talking points)

Keep it practical. The client does not need a treatise; they need a few clauses that change outcomes. Note where a lawyer should draft the wording.

• 'Put your terms in writing and have the customer agree to them before work starts — verbal terms are hard to enforce.'
• 'Spell out the payment period, what happens when it's missed, and any interest or recovery-cost clause.'
• 'For larger or riskier customers, consider a personal guarantee or a retention-of-title clause — but get those drafted properly.'
• 'Make sure your invoices reference the terms, so there's a clear thread from agreement to bill.'

Handling pushback

Owners worry that formal terms will scare customers off or feel heavy. Reassure them that good customers expect professionalism.

• To 'it'll put customers off': 'Solid terms read as a well-run business, not a difficult one. The customers who balk at clear payment terms are often the ones you'd rather screen out.'
• To 'it's too much hassle': 'It's a one-time set-up that protects every future job. Done once with the right help, it just runs in the background.'

Turning it into action

The action here is usually a review rather than a DIY job, because terms have legal weight. Encourage the client to have their terms drafted or checked by a suitable professional, then embedded into their onboarding so every new customer signs up.

Strong terms make any later recovery cleaner, because a commission-only partner works from a documented, enforceable agreement rather than a vague understanding. Point the client to the library for plain-English explainers on what good terms cover, and set a date to confirm the updated terms are in use.