Disputed debts and how to avoid them
How to avoid disputed debts?
As a business owner or service provider you work hard for your clients and customers. Often you have repeat customers with longstanding relationships, other clients are new, and it is your first time dealing with each other. You do all the work and everything required, and then a dispute is raised; they are not happy with the outcome (could not be your fault), it has taken too long, or they just want to get out of paying.
With either a longstanding client or a new customer, there is still the risk of disputes but also some ways to minimise disputed debts.
With an existing client, you may not have a proper contract in place that deals with what happens in the event of a dispute and that extra trust and confidence you have in the relationship might mean you overlook these types of issues.
With a new client, you have no trading history with them and are not sure if they will pay and what other issues could be raised if things go wrong.
Here are some ways you can try to avoid pitfalls and disputes:
1.Establish trading terms
If your relationship has occurred over time, it may have changed, and you may not have any terms in place. Review your files and see if this is the case.
2.Review your terms and conditions
Having terms and conditions is important in the event of a dispute, and having clear terms can help to avoid them altogether.
3.Manage any issues with quality or timing proactively
Dealing with issues sooner rather than later can help to avoid disputed debts & work. You may know there is an issue and keep hoping for payment like the dispute or issues do not exist this is the exception, not the rule.
Open lines of communication can help stop a dispute in its tracks. Most people are reasonable and willing to engage before a dispute gets out of hand.
If a dispute does arise then make sure you have emails and file notes that record conversations. If your client tells you something important or you negotiate extra terms, having it writing will be key to dealing with the dispute later.
Much of the above also applies to new clients.
Investigate the company and position of the directors. If you are taking on work for the first time, you want to see if they have the ability to pay on time and in full.
Ensure that you have trading terms that set out the relationship and what happens in the event of a dispute. Consider an expert determination clause that sees the parties use an independent expert instead of the court to decide issues.
Ask for trade references and check them! If you are not satisfied then ask for a few more, this could save issues down the track.
You are in business to do the work you enjoy. Disputes can be a time-consuming and unfamiliar world. If you have any disputed debts that is taking up your time, reach out to our team at Tempest to see if we can assist and buy your debt(s) on an outright or split recovery basis. You can also contact us at [email protected] or call us on 0800 845 885.