No-one ever completely wins in money disputes or court proceedings. Even the winners in court proceedings are often out of pocket.
Prevention is the best cure! With that in mind, below are 10 suggestions on how to best prevent disputes and manage proceedings. These suggestions will not only help you reduce the risk, costs and stress caused by litigation, but they will help you focus on running your day-to-day business.
1. Plan around assets and exposures: Make the time to talk with your accountant or lawyer about your personal and business affairs. In doing this, you can adjust and restructure your financial set-up.
Working with others
2. Terms and conditions: Agree to a clear and precise set of contract terms with every customer and supplier. If you have good terms and conditions, use them and stick by them!
3. Manage and protect your assets: Seek director guarantees and/or charges over real or personal property. By the same token, don’t agree to provide an open-ended director’s guarantee if you are uncomfortable with being personally liable for your company’s current and future debts.
4. Set a credit limit: Do not let receivables keep escalating. It is also important to remain conscious of your own debt levels. Set your limits and keep to them!
5. Effective housekeeping: Keep records of documents and correspondence with the counter parties. It is useful to maintain an electronic file. It can sometimes be illegal or even a criminal offence to discard evidence.
6. Contract do’s and don’ts: Follow agreed contract terms carefully and be ready to enforce them assertively. If in doubt, ask your lawyer about an impasse or unclear terms.
7. Troubleshooting: Consider all debt recovery options available for resolving problem accounts. These may range from assertive requests to aggressive applications. Sometimes a cost-effective letter or statutory demand can be quicker and more appropriate than a slow and expensive legal proceeding.
8. Plan of attack: If you reach the stage of litigation, plan out the appropriate dispute steps. It is important to ask for advice on the evidence available.
9. Open up your options: After any action has started, consider when parallel negotiations might enhance your objectives.
10. Positioning: Maintain a consistent and logical position at all times until your outcome is secured. Whilst good negotiations can be slow and painful, remember that roughly 95% of disputes are resolved as a result of negotiation.
Whilst there are times when disagreements and litigation are unavoidable, often the best solutions come from openly discussing ideas and information. If you are in doubt about a situation, seek advice and direction from your lawyer.
In addition, it is usually sensible to see a lawyer when:
- a lot of money is at stake
- a situation becomes complicated
- a novel solution is needed; or
- a situation is too personal to handle objectively by yourself.
Following these simple, practical steps will alleviate much anxiety and allow you to remain focussed on the objectives and management of your business. If you have any queries, don’t hesitate to contact me for advice.