The Importance of a Signed Credit Agreement

18 Apr

Getting a sale for your business is a lot of work. You have to find leads, create proposals, talk to customers, close deals, and plenty more. One of the most important parts of this process though is getting a signed credit agreement. It would be great if you can just rely on people’s word or assume a customer will always pay according to the agreed-upon terms every time, but this is not always the case. Here are a few reasons why you should never forget to get a signed credit agreement for every sale. 

Getting Everyone on the Same Page

Over the course of a sale, there will normally be some back and forth on the agreed upon terms. This process will most likely involve more than just you and the customer. There may be salespeople, managers, and potentially others. This is a normal part of doing business. They key is making sure that once a deal is agreed upon, both sides and every person involved are agreeing to the same deal. A credit agreement should clearly state all agreed upon terms in order to make sure that all parties of fully aware of the terms they are agreeing too. 

Protect Your Company

At some point or another, you will most likely have a customer who tries to change the terms of the deal on you a few months in. They may try to pay on slower terms than agreed upon. They may try to change the agreed upon purchase amount or any host of other changes. In an ideal case, they talk to you about this and you work together on a solution. Sometimes though, this is not possible and it is important you have a signed agreement in order to protect your company and its interest. While you are guaranteed certain broad rights under the Unifrom Commercial Code, the best way to ensure your interest are protected is to have your own signed agreement. 

Fees, Interest and Other Details 

Many deals will come with specific details and clauses that outline what to do in the event of slow payment or in other potential scenarios. It is very hard to clearly state all of these over the phone or in an email. Not to mention, they will be far harder to enforce if they are not apart of a signed document. Including these in a signed agreement will ensure your customers know and agree to them, all while giving you the means to enforce them should the need arise. 

At the end of the day, there will always be customers who do not honor the agreed upon deal.  A credit agreement gives you a great tool to not only combat this if it occurs, but actively prevent it.

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