What should be included in your terms of service at the start of your business?
Your terms of service should be at the top of your priority list – they are a draft of the bones of your business because they impact on your cash flow and profitability. For instance, it is common place for companies to put invoices from SMEs to a side, assuming that they won’t impact at all on the company’s cash flow or the director’s daily needs, if invoices are paid as and when it suits the client. If you are not affected by the timing of invoice payments, then you can be flexible in your terms of service and offer 30, 60 or 90 days from the invoice date until payment is made. But if this impacts on your daily expenditure, then 7 to 14 days, plus penalties for late payment would be something to consider, when you discuss with your solicitor what to include in your terms of service. Remember also that the minimum legal requirement for invoice content is yours or your business name and address; but you should also include in your invoices the date by which they should be paid, because if you don’t, your clients are by law allowed to pay your services as and when it suits them.
Your terms of service should address all aspects of the business in relation to your client right on the outset of the relationship. Everything that involves your client should be in this document that will be used in the court of law should any issues arise. Also, this is the document that you produce when in dispute with your client and even just as a reminder of your business terms for you and for your client. Remember though, each client might need amendments made to the terms of service.
Of course, what goes on the terms of service depends on your business, its size, what kind of relationship you want to have with your clients and what you want to protect. For instance, a pet care company might want to add to the terms of service a clause that sets out what will happen should the client’s dog bite someone or cause damage to property. An office ad-hoc administrator might want to include in the terms of service any fees chargeable in the event of last minute cancellation of services. It’s up to you and your solicitor to discuss what goes on your business terms of service and it is entirely up to you to make it clear what your business is and what direction you want it to go, as well as what kind of relationship you want to have with your clients. In any case, your solicitor will help you see every aspect of your business more clearly and will advise you on the best way to protect your business.
You must have a concise definition of services your business provides, when will the relationship start and with whom, what the fees are, what penalties may be incurred and on which events, what the payment terms are, when the relationship will end or if the date isn’t known, how the relationship should end. All in all, the terms of service protects the business and your definition of services are brief but comprehensive. So think about the bare bones of your business, right down a list of everything you can think of that might affect your relationship with your clients as well as your cash flow, then present it to your solicitor prior to your first consultation.
If you would like to have a free first consultation with a solicitor, please give us a call and we can set up a time to discuss that first draft of your terms of service.
Your Terms Of Service – Your Rules!
A dog lover set up a pet care service in a town swarming with pet owners desperately needed someone to care for their beloved animals when they went away for weekends or on holiday. The dog lover and newly self-made entrepreneur knew that although people love their pets, they can’t spend every waking hour with them – there was definitely a gap in the market for pet care. She set up a day care and boarding business for pet owners. Her business was a tremendous success without any competition in her town, but she ran into difficulties with her clients because there was no formal agreement that protected her company, the pet owners and their pets. Because hers was a small company, she decided to draft her own terms of service with the help of Google search and plenty of experience running her own business.
Although it sounds impressive to show your clients you have the capacity to draft your own terms of service, that capacity lies with a legal expert. Your expertise is with the services your company provides, not with law. If you’re not a qualified solicitor, what serious problems do you think your company will come up against with amateur terms of service signed and countersigned by your clients?
• Court judgements
• Financial loss
• Poor reputation
And all because you thought you could write your own company’s terms of service without the help of a qualified solicitor.
Your terms of service need to be very comprehensive and cover aspects of your business that will affect you and your clients, but they also need to help build your clients’ confidence in your services. For instance, one clause, or rather, one paragraph of the pet care company’s terms of service informed the client that they would charge the client for a brand new car seat if their dog chewed or caused any damage to it. This of course left their clients very uneasy because they couldn’t supervise their own pet when out with its carer. Common sense would dictate that it was the carer’s responsibility to make sure no harm came to both the dog or their property, because it was out of the dog owner’s power to keep the pet carer’s property protected. If the pet carer’s company ended up in court with the pet owner because of damage to property, they would really stand no chance of winning the case against their own client. And what would be the repercussions whether they won or lost the case? Would you want to pay for services by a company that takes its own clients to court over something outside the client’s power? SG
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