When an account goes bad, the question that decides how easily it can be recovered is rarely about the debtor. It is about the paperwork. And the single most important piece of paperwork is the terms of trade.
What terms of trade do
Terms of trade are the agreed rules of doing business with you: when payment is due, what happens if it is late, whether interest or recovery costs apply, and how disputes are handled. They convert an informal expectation into an enforceable agreement.
Why a recovery succeeds or fails on them
A recovery built on clear, signed terms stands on firm ground. The amount owed, the due date and any additional charges are all defined and agreed. A recovery built on nothing more than an invoice and an assumption is harder — every element can be questioned.
What good terms include
Strong terms of trade are written in plain language and cover payment timeframes, late-payment consequences, retention of title where relevant, and a clear dispute process. They are provided to the customer before work begins, and — ideally — acknowledged in writing.
The takeaway
You cannot fix a missing agreement after an account has gone bad. But you can make sure the next account is opened properly. Reviewing your terms of trade is one of the highest-return hours a business can spend on its receivables.
Merion offers credit-control advisory alongside recovery. Get in touch to talk it through.