"I need to recover my debts/rent, I've got to take them to court."
Covid 19 has brought the most difficult times for some businesses reminiscent of the Great Depression of the 1930's.
Whilst we are all together in this economic downturn, keeping communications open is an absolute necessity. Regretfully, whilst most people are being respectful, some are using the Covid 19 restrictions to avoid debts owed. The government has amended much legislation to assist business to trade through this period. One of the changes is to the time required to respond to a Statutory Demand from 21 days to 6 months and another is increasing the debt from $2,000 to $20,000 to allow a windup application. Thus, a relatively easy lever to have companies to respond to outstanding debts has effectively disappeared. This has been evident in both the government and private sector which has seen applications for Windup applications decrease markedly.
I continue to successfully recover outstanding money starting with a Letter of Demand and if necessary proceed to debt recovery action in the courts. Whilst I always recommend going to court as a last option, I attribute my continuing success to very careful preparation and ensuring as much as possible I have covered all bases that may allow a debtor to defend. It is very important to show the court the attempts that have been made to settle the debt as courts wish to have matters mediated if insufficient attempts have not been made.
One of my clients who is a supplier has been chasing outstanding invoices for months. He has been met with silence, phone calls have not been returned, emails not responded. Out of frustration he rang me. My first response was that court should be the last option but when I was given his records of multiple attempts to contact the debtors, I could fully appreciate his concern. The first action was to have a discussion regarding the prior behavior of the debtors and as the crises abates whether he wanted the debtors again as clients.
There seems to be a misconception that suppliers and landlords have long pockets and can afford to support smaller businesses. This situation is very misguided, even the largest companies and landlords have their staff and suppliers to pay. It is often the case that a business' inventory or landlord's properties is supported by overdrafts and/or mortgages which depend on cashflow and/or rent to service.
I started by contacting the debtors, many who were either sole traders or partnerships, by email asking them to contact me. I must say the response was disappointing. Less than half responded. They shared their situation and their embarrassment of getting behind in payments for the first time, without sufficient income. I asked them if they had accessed Jobkeeper. To my surprise I often was told as their accounts were not up to date they could not meet the records requirement. There is help available either free or a minimum charge. Please access this article on The Conversation:
My efforts have resulted in many debtors either paying their outstanding invoice or agreeing to payment plans, which has come a good way to relieving my client's cashflow crisis. Regretfully, it took court action to get some debtors to the table.
I have found most creditors who are approached promptly, with openness and honesty will work with you to enable your business to continue trading. Silence is disrespectful and can lead to court action without notice. My advice is to keep an open conversation with your creditors and landlords should conditions appear to be affecting your ability to pay invoices or rent. I have found that the majority of people when they have been contacted at the first available time, are willing to negotiate. I have been involved in negotiations for my clients both debtors and creditors as a result of Covid 19. In the majority of cases the parties have arrived at a suitable arrangement. From my experience delay and silence acts to build walls, inhibiting efforts to negotiate.
In these times no one is able to get what they want but as mandated in the Commonwealth Mandatory Code of Conduct for medium and small business "good faith" negotiations will enable most of us to survive now to be in a position to prosper in the future.
If I can be of service to assist you or anyone you know, please contact me.
Have a wonderful day,
0419 233 670
ps. I am available to discuss matters either in my office or by Zoom conference; and provide notary services which must be in person