Attracting customers and finding suitable suppliers takes a lot of effort. So many companies lose these contacts through misunderstandings over the terms of their relationship.
To keep them, you need to ensure hat you maintain good communication by creating contracts that work for both of you. That is where your business agreements come in. You should use them to make duties and roles clear to both parties. Here are some important clauses:
Duration
You might hope your business relationship will last forever. However, putting definite start and end dates in your agreement allows you to renegotiate or move on if the arrangement no longer serves you.
Terms of payment
Cashflow is crucial to your success. No matter how well the relationship is progressing, there is a limit to how long you can last without cash coming in.
Simply explained: You run a bakery and supply local restaurants with baked goods. If they all pay late, there may come the point where you no longer have the funds to pay your suppliers. Without ingredients on hand, you cannot bake any more bread to sell.
Penalties for breaches
You may want to state that late payments incur interest or that you get a discount if your supplier delivers late. These penalties can help to incentivize people to keep up their side of the deal.
Drafting a contract or understanding something that the other party has drafted can be challenging. When you sign the paper, you tie yourself to whatever that document says. You cannot afford to get it wrong. We help businesses with contract drafting and negotiation. Contact us for a consultation.