New Zealand Building and Construction companies have a plethora of paperwork to wade through in their efforts to create a profitable business.
Not only must they satisfy their customers that they are Certified Licensed Building Practitioners, there is the Health & Safety requirements to comply with, the nuances of the Construction Contracts Act 2002 and the challenge of ensuring that a “commercially savvy “legal entity has prepared their building contracts.
However, as I found out last month educating builders throughout Nelson and Marlborough in my role as Area Manager for EC Credit Control nothing will manage and protect the cashflow of their business unless they have in place, robust “Terms and Conditions of Trade”.
If you are a builder and you don’t have “Terms & Conditions of Trade”, “Get some”!
If you are a builder and your “Terms and Conditions of Trade” are old and outdated. “Get some new Terms”! Why? Easy! It will manage and protect your cashflow.
If a customer owes you money, surely you would want to recover the original monies owed along with costs, debt recovery fees, and legal fees. Terms of Trade disclosed to your customer, signed by your customer gives you the power, as this constitutes acceptance by the customer and most importantly it gives the “debt recovery team “the ability to legally recover costs. The clause is called “Default & Consequences of Default” and it is literally gold!
The Privacy Act 1993 allows your business to credit check a private or commercial entity along with their creditworthiness. Many New Zealand businesses have saved themselves from financial heartache after credit checking a customer only to find that the customer has had a history of non-payment. What a joy to get this information early and not after the job has been completed eh?
If you are a builder and you belong to an “Association” do yourself a favour, give due diligence to your documentation. Both Master Builders and Certified Builders provide members with a very good nationwide service but “Terms and Conditions” which manage and protect your cashflow does not appear to be part of the mix.
In October I was privileged to draft new “Terms and Conditions “for Simcox Construction Limited, Rob Blick Builders, N. Hunt Construction Limited in Blenheim along with Plymouth Contracting Limited and X-Factor Design& Build in Nelson. These companies clearly understand the importance of correct disclosure and acceptance of “Terms and Conditions” in the management of their businesses.
As we approach the new financial year ensure your management team give “the heads up” to new, robust “Terms and Conditions of Trade”. It is fundamental in managing and protecting your cashflow.
You won’t regret it!
Ray Marshall Area Manager