Terms of Business Agreements

One of the most important things about running your own business is deciding on the terms under which you will supply goods and services to clients. These are often contained in a Terms of Business Agreement, or TOBA.

Key things you might want to cover in your terms of business include:

  • Credit terms – how long your client has to pay. I allow 14 days for corporate clients (e.g. limited companies) and ‘on receipt of invoice’ for individuals.
  • When and how invoices will be raised, e.g. at the end of each month by email to a nominated address.
  • What payment methods you accept, e.g. I only accept payment via bank transfer – no cheques or cash (the cost of handling them is too high).
  • What happens if you are unable to complete work for any reason (e.g. illness or jury service).
  • Notice periods for bringing the agreement to an end – I require these to be the same for both parties, i.e. if I have to give 30 days notice, so does the client.

Other things to think about:

  • Who signs the TOBA – are they in a position to enter into binding agreements on behalf of the client?
  • Are there any client-specific changes to make? For example I change my credit terms depending on the type of client, and occasionally clients will ask for a slight change of wording to the confidentiality clause.
  • Do you want to insert a clause stating that the client doesn’t own the work until they’ve paid for it? This might sound obvious but it’s something I rarely see, even though it gives you an additional line to pursue if someone refuses to pay and uses your work anyway.

The most important thing to remember is do not do any billable work until your TOBA has been signed. Don’t allow yourself to be bounced into doing ‘urgent’ work without a signed TOBA, or accept the excuse that the boss isn’t in but can you start now anyway. No reputable client will refuse in principle to sign a TOBA, so this is also a good way to filter out timewasters and non-payers.

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