One in three companies do not confirm their credit terms in writing.
The Better Payment Practice Group (BPPG) urges businesses to spring clean their credit management procedures, following a survey by the Group, which found that one in three do not confirm their credit terms in writing.

The poll, which was held on this website asked businesses if they confirm their credit terms in writing. Of the 280 respondents, 32% admitted that they did not send their customers written confirmation of credit terms. The survey split respondents by number of staff and found that medium businesses, with between 50 and 250 employees were least likely to confirm terms in writing, with 43% not doing so. In contrast, 80% of small businesses, with between 10 and 49 employees, and large businesses, with over 250 employees, said that they sent written confirmation of terms.

René de Sousa, BPPG representative for the Chartered Institute of Purchasing and Supply, said: “By not agreeing terms up front, businesses are putting their cash flow at risk of abuse from late payers. The BPPG recommends that businesses send written confirmation of credit terms to customers before they start trading with them, to avoid disputes further down the line.

“As well as ensuring that customers know when to pay, agreeing terms of trade credit at the outset provides an important opportunity to inform the purchaser of any legal redress that may apply in the event of late payment – such as the statutory right to claim interest and compensation for debt recovery costs under the late payment legislation. Businesses of all sizes need to recognise that agreeing credit terms is as important a part of the contract negotiation process as price, service and delivery.”

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