Tax invoices for goods and other contracts should ideally include a Romalpa Clause. This is a retention of title clause which is a provision in a contract for the sale of goods that the title to the goods remains vested in the seller until certain obligations (usually payment of the purchase price) are fulfilled by the buyer.
If the purchaser has agreed to these terms, ownership does not pass to them until payment is made in full. This can help protect suppliers in case the buyer goes broke. The goods cannot be seized or sold by any trustee in bankrupcy, receiver, liquidator, etc as the goods do not belong to the purchaser.
To ensure effectiveness, we suggest you seek appropriate legal advice as to the exact wording approriate for your particular business. If you’re selling goods on credit, it’s worth the time reviewing these little things now, especially given the current economic climate.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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