Do you get your customers to sign a contract before you start supplying services or goods? If not, we have good news and bad news.
The good news is that you still have a legal contract (because the law says you do)
The bad news is that legal contract:
- has very little in it that benefits you
- if there is a dispute you do not have legal control of the situation at all
- If you’re not paid, you’ll have to sue and suing will take all the profit (and more) out of the original deal.
We often have clients who are owed money come to us for advice about collecting it. Often, all they did was take an order by email, fax or phone, provide goods and services, and render an invoice.
So what’s wrong with getting the order, doing the work, and invoicing?
Sometimes, not getting paid comes packaged with a ridiculous complaint about your services or products that is just a smoke screen for “I don’t have the money”. The thing is, they do have money. They just decided to pay someone else instead of you.
In other words, they aren’t necessarily bad people. But business is business and you’ve got enough on your own plate – you don’t need other people’s problems being piled onto yours as well.
That’s why we urge you to book a meeting with Your LegalHQ to learn
how we will protect you from strangled cash flow. We can also make
sure that your customers have to pay your legal costs of suing for
payment, if things go that far.
or
Call us now on 08 9445 9200 for a free chat about protecting
your business.
It is a fact that if you deal commercially, verbally or with purchase
orders and invoices you do have a contract:
it’s just a really bad one
Why is that? In short, the law says that your contract is whatever you agree with your customer. So when you
get a telephone order, supply the goods or services and send an invoice for $1000, your contract ONLY covers
what you are supplying, and the price.
It does not:
- Protect you from companies going into liquidation by including directors’ guarantees;
- Cover you against claims you were negligent in supplying services and caused loss;
- Allow you to charge interest for late payment;
- Protect your profit margin by allowing you to charge debt collection and legal fees
- Let you repossess goods you haven’t been paid for;
- Allow you to register ownership of goods under the Personal Property Securities Act;
- Allow you to forfeit deposits if your customer cancels the transaction;
- Provide for you to lodge a caveat over a customer’s land to secure payment;
- Allow you to change the price if anything unexpected happens to protect your profit;
- Protect you from the risk of claims where goods or services are not delivered on time;
You need most of the protections above. Without them, any form of dispute is going to land you in an expensive lawyer’s office. And the contract you do have (based on phone calls or invoices) is very much open to interpretation.
Your lawyer won’t be giving you any guarantees. And what they can do for you will come at a high price because you did not take action to remove variables by nailing down the terms that will give you the whip hand in any dispute.
The thing to remember is that at the moment, if you’re working on the “order-supply-invoice” system, you’ve GOT NOTHING. So you have to hope that every transaction is silky smooth.
But that’s not how life is, is it?
Call us now on 9445 9200 and tell our receptionist you would like to speak about “new trading terms”. We’ll guide you from there!
Without the right protection in your day to day business dealings, it will be very expensive to have a lawyer help you if a transaction goes sour.
This is about actually getting value for money from a lawyer. Legal services are expensive.
But read on to learn how to get those services to pay for themselves completely.
Here’s what most people do
Keep cruising along, thinking that since they have had no trouble in their dealings with their customers in the past, things will be fine in the future.
The reason we don’t want you doing that is RISK. If your business dealings are not documented properly, you have this problem:
Someone can always create wriggle room by “creating” a dispute. And they can use YOUR UNDOCUMENTED CONTRACT to do it
- walk away from your money (which might cost you thousands of dollars)
- agree to accept less (which might be thousands of dollars);
or - fight for your money, (knowing that you will end up paying thousands of dollars)
If a customer doesn’t pay a bill for $10,000 and you need to get the money back, then the legal costs of suing the customer and getting judgment at an early stage might be $3,500. So the work you charged $10,000 for actually nets you $6,500.
This means two things:
- 1That’s probably the end of your profit; and
- 2You still haven’t fixed the problem that got you here in the first place – poor documentation – so you’re losing money paying lawyers again.
Lawyers are happy to sort out a mess for a fee. But wouldn’t it be
better to pay for a solution rather than paying a lawyer to do mop and
bucket work all the time?
Here’s what you should do
Consult Your LegalHQ to get a standard set of trading terms written up which give you complete protection. Call us on 9445 9200 to make a time to discuss standard trading terms and get your legal services to pay for themselves over time!
You can have a set of standard trading terms prepared in a few weeks which will:
- Make company directors liable for your invoices if the company doesn’t pay;
- Stop the customer successfully suing you if goods or services are supplied later than the time agreed;
- Make sure that if your customer doesn’t pay and you have to sue, you can charge your legal costs back to the customer as a debt due and owing;
- Allow you to walk into a customer’s business and seize goods which haven’t been paid for;
- Give you the right to increase the price if the job is bigger more difficult than you were told;
- Make sure you can charge interest on unpaid accounts;
- Deal with the other issues we have discussed and any “custom” issues where you need the protection we can provide.
Once you have these in place, you do not need to pay for them to be done again.
And yet every single time you use your standard terms, they are working in your favour to give you all the benefits and protections you need.
Remember how we talked about our services paying for themselves? Your trading terms only have to save you from having to write off one decent bad debt to pay for themselves – sometimes more than twice or three times over.
So don’t make the mistake of delaying this decision.
It’s far too important for that.
Call Your LegalHQ on 08 9445 9200 to book a time to come and see us to discuss getting all the protection that you need to:
- protect your business from unexpected liabilities; and
- ensure payment of your invoices.
We look forward to speaking with you.