Businesses usually work hard to provide goods and services to others and are excited about delivering their products to their customers. However, it is surprising how many businesses forget about the importance of getting paid.
Unless you are paid for your goods or services, your business may fail.
This means you need to ensure that your customers understand how much they need to pay, when they need to pay by and which methods they can use to pay you, such as cheque, cash or EFTPOS.
Often, the best way to achieve this is to have Terms of Trade conditions printed on your invoices or quotation documents.
These are usually given to your customer as part of the sale process and that way there can be no excuses for non or late payment.
Our specialist business lawyers can assist you in reviewing your Terms of Trade or your Credit Applications.
What happens though when your customer still doesn’t pay?
If despite your terms of trade, your customer still hasn’t paid their outstanding account, you may have to pursue your customer through the court process.
As your terms of trade should include the right for you to charge your customer the cost of debt collection, you should not hesitate in seeking the assistance of your lawyer to assist you in the debt collection process.
Generally, a letter of demand from your lawyer will prompt your customer to negotiate with you for repayment of the debt. However, in our experience there are some customers who fail to appreciate the importance of the situation. Commencing legal action against a customer can demonstrate to your customer the seriousness of the situation and can often encourage immediate settlement of an outstanding account.
Once a judgment is obtained in your favour through the courts then there are numerous methods available for collecting the debt owed including:
- Bankrupting the customer,
- Garnishing wages,
- Seizing any unencumbered assets owned by the customer and selling them at auction,
- Forcing the customer to attend a public examination at court where they are questioned on their assets and liabilities,
- The attachment of the judgment debt to real estate and the subsequent enforcement of the debt by the sale of such real estate.
Remember, the time spent in properly planning your business is an investment that will provide you with many returns.