Four Simple Credit Clauses That Will Save You Thousands
4 Simple Credit Clauses
That Will Save You Thousands!
Extending credit is part of a healthy business. Few things are more important for those businesses extending credit then having a strong credit agreement/application.
Credit agreements need four crucially important clauses. These four clauses will determine if a debt is collectible or not collectible should your client default on payment. Without these clauses, it can be virtually impossible to collect on your business debt and cost many thousands extra.
Clause 1: Collection Fees
A strong credit agreement should always include a clause about collection fees. Even though a lot of collection agencies do collections on a contingent basis, it still costs money. A clause that includes collection fees will allow your company to require its debtor to pay for reasonable costs associated with the collection.
Clause 2: Attorneys Fees
Often times, attorneys fees can have significant cost when collecting debts. This is especially so when a claim requires litigation. Adding a clause that your debtor will have to pay attorney fees adds an additional layer of protection should they default.
Clause 3: Interest Fees
You’ve extended your client credit. And if they pay you back within the terms agreed upon, that’s a win win for both firms. However, if your client doesn’t pay you back on time that hurts your business. The money you’ve lent them carries value. Don’t forget though, so too does the time that you’ve lent them money. Time carries value. Charging interest on late payments makes sure your business is compensated.
Clause 4: Court Fees
Going to court costs money and there are always fees associated with any trial, both criminal and civil. Typically, defaulting on credit terms is a civil matter, and while costs may vary, county court fees usually range around $500. Including a clause that requires your debtor to reimburse these court fees saves you from having to spend extra money to collect what you are already owed.
Adding these clauses to any credit agreement can help cover some of the extra expenses incurred when attempting to collect a debt. Any credit agreement that you‘re business extends, should be reviewed by a professional attorney.
It is imperative that you use an agency with industry experience. There are no other agencies with more cannabis and collections experience than CannaBIZ Collects. Half of the team comes directly from working as executives at a large farm, MIP, and dispensary, while the other half has more than 30 years experience in collections.
If you need assistance CannaBIZ Collects now offers credit contract review and credit policy consulting. Give us a call at (720) 724-7810 or send us an email to firstname.lastname@example.org.