How Do You Manage Legal Risk? Peter Aked – Eakin McCaffery Cox
Protecting your business with good documents might just be your last line of defense!
In today’s economy managing business legal risk is one of the most common challenges businesses face. This week Peter Aked from Eakin McCaffery Cox explains that there are two aspects to this:
All advice contained in this segment is of a very general nature and should not be relied upon as a substitute for obtaining legal advice directly from a legal practitioner – as each particular legal matter will require advice which addresses the legal issues arising in relation to a particular matter – which varies as between different matters – as such should you be in need of legal advice it is strongly recommend that you consult a legal practitioner.
The structure of the business
The advantages of being incorporated though a company entity rather than through a sole trader or partnership can help separate hard earned personal assets from being exposed to business risk.
Have good business documentation
Having good documentation with your customer/clients ensures that if in the circumstances payment is not received for supply of a product or service you can either recover the product or payment from your customer. Peter stresses that good business documentation can have great advantages down the track especially if you get into any problems with your customers.
If in the event that you cannot recover your payments, Peter explains that you need to go through the recovery process. Make demands, do what you need to do in order to see if you can resolve the matter and only use the legal process as a last resort.
“It’s just a matter of getting to know your customers, knowing them, working with them and ensuring that they are happy”
Peter explains that from market to market using such things as personal guarantees will be resisted however there are other things you can do (techniques to deal with customers) such as retention of titles clauses, having customer pay deposits, credit checks and reference checking. You may even like to supply part of the product or service and see if payment for the first half comes through can be used as techniques to ensure that your legal risk is minimised.
Peter Aked is a commercial lawyer and practices predominately in commercial law, he handles a number of finance clients, handles litigation matters and also property matters. Eakin McCaffery Cox acts for a number of businesses both in the SME market and larger businesses, local councils, Universities and government instrumentalities.
Peter explains that the three most important things in business is cash flow, cash flow and cash flow and the number one business problem always seems to be payment from debtors/customers.
The thee big benefits to a business from using cash flow financing is the following:
- It evens out the peaks and troughs of the payment cycle
- Unlocks a resource of financing within the business which a lot of businesses don’t think is available
- Cash flow finance can be used to take advantage of another market or an emerging market
