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Legally, the ownership of goods sold remain that of the supplier until paid for in full. However once delivered it becomes quite hard to identify this ownership and especially if the receiver of the goods goes out of business. It is always wise to state on the appropriate invoice(s) that the ownership will pass to the Customer only after payment has been received in full. Although a statement can be included in the Terms and Conditions of Sale such a document would be considered as 'small print' and most likely ignored until the matter reaches court, by which time the costs of retrieving either the money or the goods make it impractical
Obviously doing business on a cash basis avoids the question and if credit is being offered to the Customer then be sure to collect your money in the time agreed or demand the return of the goods in their original condition
The practical situation will always cause increased costs and thus a loss of gross profit on the deal. Sometimes it is better to write such a situation off against experience but be sure that you learn from it and never do business with that Customer again
We have come across a few companies who do not pay and yet their suppliers will continue to push them for more orders. Crazy ? Yes, but if sales commissions are involved the sales people will not be concerned with credit control unless you make it their job to ensure that they are part of that activity or better stil,03-Jan-2011
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Last Update 08-Jan-2012
Date first published 07-Nov-2005