Terms and conditions set out the rules governing a transaction or relationship - payment terms, delivery obligations, liability limits, cancellation rights and similar provisions - that both parties agree to by transacting.
What it means
They're often referenced rather than repeated on every document - a quotation or invoice might state that it's subject to the business's standard terms and conditions, and point to a fuller document, rather than listing every clause each time.
Where it fits in
Payment terms specified in the T&Cs, for example 30 days from invoice date, directly affect a business's accounts receivable ageing and cash flow planning.
Key rules
- Set the rules governing a transaction: payment terms, delivery, liability, cancellation.
- Often referenced on quotations and invoices rather than repeated in full.
- Payment terms here drive accounts receivable ageing.
- Should be agreed before, not after, a transaction takes place.
