Cash is King, Part 2: How AGB massively strengthens your position in receivables management

Close your eyes and get through it: This is how people behave when they come across general terms and conditions in everyday business. The majority only skim them or don't read them at all. Companies often do without them altogether, with the consequence that they often come away empty-handed in the event of a payment default. However, general terms and conditions can protect a company from the total loss of its own receivables. When companies enter into a business transaction with a customer, they should therefore first think about the Receivables management and think about their own protection. "We recommend companies to regulate the payment modalities and the consequences of possible reminders in the GTC," says Jason Glanzmann, Director Serviced Portfolios at Intrum Justitia.

Lawyer and book author Regula Heinzelmann also knows how important general terms and conditions are for receivables management: "General terms and conditions are always a good PR tool. The key is to formulate them in such a way that customers understand them immediately. In this way, you avoid annoying and costly lawsuits." The expert recommends not simply adopting prefabricated GTCs or those of the competition, but always adapting the GTCs to the individual circumstances in the company, if necessary by experts. "Depending on the industry, there are corresponding guidelines that must be observed."

GTCs are part of risk management

With general terms and conditions, companies regulate their business relationship as comprehensively as possible and they do not have to specify each modality of a contract individually. In particular, GTCs serve the author to pass on the risk, especially in matters of liability and warranty. GTCs are binding if they are accepted by the companies involved as an integral part of the contract. Regula Heinzelmann advises to always include this wording in an individual contract. "If both partners refer to GTCs, the concurring clauses apply. Agreements that deviate from the general terms and conditions are, in principle, best set out in writing," says the lawyer.

Ten tips for secure GTC in receivables management

If you have changed your general terms and conditions in the Collection want to formulate effectively, you should follow these tips:

1. Observe the applicable laws so that you make the formulations within this framework. Illegal clauses are void; however, the parts of the GTC that comply with the law still apply. "According to the Federal Court, the entire contract is void if this legal consequence is expressly provided for in the relevant law or results from the meaning and purpose of the violated norm," says Regula Heinzelmann.
2. Pursuant to Article 8 of the Federal Act against Unfair Competition, it is unfair to use general terms and conditions which, to the detriment of consumers, provide for a significant and unjustified imbalance between contractual rights and contractual obligations in a manner that violates good faith.
3. Ensure transparency. Refrain from unusual, surprising clauses that severely disadvantage the contractual partner.
4. Use simple language. After all, clauses should not be open to ambiguous interpretation or contradict each other. The structure should also be clear.
5. Unusual clauses should be printed in bold and it should be pointed out that they deviate from the rule.
6. Always draft the GTC before sealing the contract. The contracting party must be aware of them and agree to their validity before the contract is concluded.
7. Clearly refer to the GTC in the contract.
8. Place the T&Cs in a generally easily accessible place, such as on your website. Preferably in such a way that customers can print them out as a PDF.
9. Liability for slight negligence can be limited and set at a certain amount or waived. However, there are exceptions. The exclusion of gross negligence or fault is void (Article 100 of the Swiss Code of Obligations).
10. Determining the applicable law and the place of jurisdiction is central for companies. It is advantageous to choose Swiss law and the court at your own company headquarters. You can also define extrajudicial variants of dispute resolution, such as arbitration or mediation. Regula Heinzelmann: "It's best to regulate the allocation of costs in the GTC."

If the contractual partner does not pay after all

What do you do as a managing director if the contractual partner does not pay the invoice after all? What options are available? Intrum Justitia shows you how to master this challenge in the third part of this continuation story.

Contact for more information:

Intrum Justitia AG, sales.ch@intrum.ch, +41 44 806 85 57

Part 1 read here.