Prevent Cash-Flow Crises: The Importance of Payment, Default and Indemnity Terms for Your Business Success

Working with a legal professional to customise and clearly define payment, default, and indemnity terms in your credit applications, terms of trade, and invoices helps protect your business from financial risk.

Learn why it matters:

Sets Clear Expectations

Clear payment terms maintain healthy cash flow, ensure smooth operations, and protect your business in case of client payment defaults.

Encourages Timely Payments

When you clearly state accepted payment methods, due dates, and any incentives or penalties, such as early payment discounts or late fees, clients are more likely to pay on time.

Let’s You Act Quickly

By defining what constitutes a default, such as a late payment or missed payment, and outlining your options, can help resolve issues more efficiently.

Adds Extra Security

Adding indemnity clauses makes it clear who is responsible and helps you recover costs if a dispute arises.

Provides A Road Map

Including indemnity clauses in all agreements (credit applications, terms of trade, and invoices) gives you a clear plan for handling defaults and taking action when needed.

Encourages Compliance

Indemnity clauses shift the risk to your clients, and can help to cover legal fees and costs if they fail to pay their obligations.

Knowing there are consequences can motivate timely payments.

Stay Consistent Everywhere

Highlighting payment, default and indemnity terms in your contracts, invoices, and websites helps makes everything clearer, shows what is expected and strengthens your legal position.

Review Regularly

Regularly review your contacts with a legal professional can help to ensure they are current, robust and compliant with current laws. This helps keep your agreements effective.

MCW Lawyers’ Commercial Litigation Team is here to assist you in customising terms to fit your specific business needs. Contact here to discuss your situation, learn more or book an appointment.