In Show 054 – Reassessing Your Business Structure originally broadcast on Facebook Live on Wednesday 24 January 2018 we explore this interesting topic.
Show Notes
All this month we are focusing on Phase 6: Maximizing your business and bringing on investors. Maximizing your business can often mean taking a hard look at your business structure. You might want to look at some alternatives to your current structure.
When you first start out you will have created a structure that worked great at the beginning but may no longer be the best way to operate. Tax regulations or other laws may have changed and you should be routinely reassessing your structure with your account and lawyer.
Too often people think that legal advice is vanilla and is the same for everyone. That’s simply not ture. Everyone needs a legal structure that is tailor-made for their operation. You don’t know what you don’t know. Getting the correct advice will be the best way to ensure that you aren’t surprised when you try and sell your business. Among the structures you could use are:
Company
A company is a separate legal entity apart from the individuals involved. The company is made up of the director who has the day to day control of the company and the shareholders own the company and are entitled to the profits. The best reason for creating this structure is to ensure that you are not personally liable for the debts and liabilities the business incurs.
Discretionary Trusts
This kind of trust is probably the most popular asset protection strategy you can use. The trust is controlled by the trustee who has legal ownership. The appointer decides who will be the trustee. The beneficiaries have beneficial ownership of the trust. The whole point of this structure is to protect individuals and the trusts assets.
Unit Trusts
Similar to a discretionary trust in that it also is controlled by a trustee. The difference is that there is also includes unit holders. Those unit holders are the actual owners of the trusts assets. It gives you the tax flexibility of a trust while maintaining control of the business. Many of the tax advantages of these kinds of trusts are no longer in effect but they are still useful in many contexts – especially in property development.
Partnership
Partnerships are two entities or two individuals who come together. You shouldn’t just use a partnership straightaway because of liability issues.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 053 – 5 Top Things you need to know about your Joint Venture Partners originally broadcast on Facebook Live on Monday 22 January 2018 we explore this interesting topic.
Show Notes
On Fast Fix Monday we discuss the top five things you need to know before bringing on a joint venture partner. Partnerships of this kind are part of Phase 6: Maximizing your business and bringing on investors. You’d be surprised how often some obvious steps are overlooked when entering into a partnership.
1. Integrity
This may seem obvious enough but choosing the right person to enter into a partnership with is absolutely critical. You may think that someone arriving habitually late for meetings or arriving unprepared doesn’t matter but it absolutely does. Your partner must be dependable and reliable.
2. Contribution
If you enter into a joint venture with someone you need to think about the contribution they are going to bringing to the business. We have had many clients that have got into dispute with their partners over the years. Almost always the source of the problem is confusions over who was responsible for what. Those details need to be clearly articulated long before the partnership agreement is signed.
3. Exit Strategy
If there is going to be an exit from the company you need to be working with someone that understands that there is structure in place to accommodate that. Finding out about their past exits in earlier deals will tell you a lot about what they will do in your company.
4. Desperation
You can’t enter into a partnership with someone that is desperate for money. That’s a recipe for disaster. Anyone that has ever gone into business for themselves knows that it costs money to make money. You can’t have someone that is constantly trying to get paid making decisions for the company. Nor can you be the only one putting up cash for the business.
5. Be realistic
Sitting down with a perspective partners and having a frank conversations is really important.
You need to honestly discuss the worst case scenarios for the business. That conversation will ensure there are no nasty surprised for anyone involved in the business.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 052 – Agreements with Investors originally broadcast on Facebook Live on Wednesday 17 January 2018 we explore this interesting topic.
Show Notes
Today on the podcast we discuss the importance of agreements with investors. This is part of Phase 6: Maximizing your business and bringing in investors. Too often we have seen companies that have brought on investors without a clear agreement. Those investors are usually friends and family if its a young business. That can create huge numbers of problems both financial and personal. Before anyone takes a share of your company you need an agreement that details all aspects of the business. It’s not a simple document. It’s extremely complex and requires a high degree of legal skill to craft for every business. Among the details that need to be clearly articulated:
1. What happens if the business owners leaves, dies or becomes chronically ill?
The owner of the business is usually the life-blood of the operation. If they become sick or incapacitated in some way that can cause major problems. There needs to be a transition plan in place which can include a buy-sell -option agreement. That is essentially an insurance policy that is put in place if the owner becomes sick or dies.
2. What happens if the founder starts another project similar to your business?
This is important because it protects the company from unfair competition from one of the people in the ownership group who may want to leave the company and enter a similar sector.
3. What happens if you need another partner?
If the business continues to expand you may need additional investment from another partner. Before that happens the details of how that will happen needs to be worked out with the current ownership group.
4. What if a partner isn't putting in the time?
It’s possible that someone in the ownership group will become distracted by another job or interest and is no longer putting in the time and effort into the company. The responsibilities of everyone involved in the company need to be clearly spelled-out.
5. What happens if there are disagreements among shareholders?
Just like a marriage everyone gets along great at the start of a new business. That isn’t always where it ends up. A dispute management system needs to have been agreed upon by all parties long before the operation gets under way.
5. What happens if there is a deadlock after a vote?
This is especially important if there is a 50/50 ownership split. It’s possible that a major decision will end in a deadlock. You don’t want to wait until that happens before you decide on how to resolve that kind of dispute.
There are many different types of shareholders agreements An early agreement can be used for start-ups and will deal with the fundamentals. This kind of agreement is great for the start of the business but it is not something you want to leave for thirty years. It should be reviewed at least every two years or so. As the business grows and changes for should the investor agreement.
When you start out you may only have one or two employees. When you bring on investors they may want a seat on the board of directors. That is going to require an agreement that details how that board is going to operate. How will elections take place? What voting rights do members have? These minute details are really important. Those procedures need to be clear and practical.
Joint ventures a re different from a shareholders agreement. They are necessary when two companies come together. It’s more like a partnership. Transferring of shares and dispute resolution clauses are equally important in this kind of agreement.
Another kind of agreement that is popular for start-ups is a loan agreement. This allows you to get a fresh injection of cash without giving up any equity in your company.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 051- Fast Fix Monday Why You Need a Shareholders Agreement originally broadcast on Facebook Live on Monday 15 January 2018 we explore this interesting topic.
Show Notes
Today on Fast Fix Monday we wanted to touch on shareholder agreements. These agreements often come into play during Phase 6: Maximizing your business and bringing on investors. Why do you need a shareholders agreement? They can provide legal security for your company and it helps to regulate future disputes. There are several “what if” scenarios this agreement will cover. Among them are:
1. What happens if the business owners leaves, dies or becomes chronically ill?
The owner of the business is usually the life-blood of the operation. If they become sick or incapacitated in some way that can cause major problems. There needs to be a transition plan in place which can include a buy-sell -option agreement. That is essentially an insurance policy that is put in place if the owner becomes sick or dies.
2. What happens if the founder starts another project similar to your business?
This is important because it protects the company from unfair competition from one of the people in the ownership group who may want to leave the company and enter a similar sector.
3. What happens if you need another partner?
If the business continues to expand you may need additional investment from another partner. Before that happens the details of how that will happen needs to be worked out with the current ownership group.
4. What if a partner isn't putting in the time?
It’s possible that someone in the ownership group will become distracted by another job or interest and is no longer putting in the time and effort into the company. The responsibilities of everyone involved in the company need to be clearly spelled-out.
5. What happens if there are disagreements among shareholders?
It’s possible that someone in the ownership group will become distracted by another job or interest and is no longer putting in the time and effort into the company. The responsibilities of everyone involved in the company need to be clearly spelled-out.
6. What happens if there is a deadlock after a vote?
Just like a marriage everyone gets along great at the start of a new business. That isn’t always where it ends up. A dispute management system needs to have been agreed upon by all parties long before the operation gets under way.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 050 – Expansion in Practice – Interview with Dan Holden originally broadcast on Facebook Live on Wednesday 10 January 2018.
Show Notes
Today we’re joined by Daniel Holden, the director of HoldenCAPITAL. Holden is a specialist construction finance group based in Brisbane. They structure finance arrangements for major construction companies and help others to invest in property developments. We’ve worked with Dan for many years and we’re really excited to have him on the podcast this week.
Daniel began his career working as a property developer. For six years he worked his way through the entire lifecycle of property development doing acquisitions, diligence and construction management. Eventually, he was approached by a finance firm to work on the debt structuring side of the business. A few years after that he set off on his own.
Dan came from a construction background and that experience has helped him to better understand his clients’ needs. Many of his colleagues come from a more traditional banking background so it was Dan’s real world experience that helped him to succeed. He has developed relationships with a select group of builders and has been judicious in deciding which projects to fund.
HoldenCAPTIAL has won many awards over the last few years. That kind of recognition has been critical in growing the business. That became especially true after the banks started to tighten their lending polices and Holden had to increasingly rely on private capital. Being able to say that they are number one in the country threes in a row has been an important feather in their cap.
Recently, Holden created HC Invest which allows investors to fund new projects. They have been helping high net-worth individuals to participate in projects by taking individuals money and funnelling those funds into new builds. They are increasingly opening those kinds of transactions to even more people. There is some risk involved but Holden routinely offers upwards of 20% return on investment in as little as 10 months.
Dan hopes to continue to expand their investor base over their next few years. He also hopes to colloborate on more joint-venture transactions. The market has changed significantly with more money coming in from Asia and other countries.
Dan says that one of the biggest issues he sees in his industry is a lack of good planning. There are many examples of developers being far too reactive instead of being proactive. Oxygen is cash in any business and companies can often find themselves money-starved if they haven’t planned for the long-term.
If you’re interested in learning more about the kinds of investment opportunities that HoldenCAPITAL offers go to: http://www.holdencapital.com.au/investment/ and sign-up to receive regular updates.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 049 – Top 5 Things to Look Out for With an Investor originally broadcast on Facebook Live on Monday 8 January 2018 where we explore this interesting topic.
Show Notes
Today on Fast Fix Monday we want to continue our discussion about bringing investors into your business. Having a fresh injection of cash can be a great way to grow your business – but there potential pitfalls. In no particular order here are the top five things you need to know before getting an investor.
1. An investor should be a partner
You don’t just want to have some random person investing in your business. You need a strategic partner that can help you guide and grow the business. You need to look at them closely to make sure that it’s going to be a good relationship.
2. Credibility
The person you’re bringing on needs to have a good reputation in the industry. In a business you may need future investors so you need to make sure everyone on your team is well-know and credible.
3. Find a well connected investor
The investor you’re bringing into the business will ideally be able to open new opportunities for the business as well as personal connections that will help you to grow.
4. Entrepreneurial spirit
Building a business from the ground up can be a hugely stressful experience and your partner has to be able to weather the ups and downs. Finding an investor that be a rock solid partner even during the worst of times is critical.
5. Find a strategic investor
You may be great at marketing or some other aspect of the business but everyone has weaknesses. Finding an investor that can shore-up your weakest point is hugely important.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 047- Maximising Your Business, Bringing in Investors originally broadcast on Facebook Live on Wednesday 3 January 2017 we explore this interesting topic.
Show Notes
Today we kick off the new year with Phase 6: Maximizing your business and bringing in new investors. This phase comes at the end of the consolidation part of your business lifecycle. You’ve brought on employees and you’ve protected your IP. Now you need to figure out how to maximize the business before you begin scaling up. Before you scale up you need to make sure you’ve solved all the problems you’re encountering in the day to day operation of the business.
Maximizing your business means figuring out what kind of business you’re in. Then detailing the operation of that business. Finally, you have to maximize the output from your employees – if you have any. There are many examples of businesses that expanded too fast. We had a client that expanded by purchasing other similar businesses. He acquired those businesses too quickly and ended up with a lot of employees that were not on the same page. The business ended up folding. That’s an extreme example but it happens all to often. Before you start thinking of expansion you have to maximize what you have.
How are you going to maximize your business? All business owners want to maximize their revenue. That’s a singular focus that doesn’t help you to achieve you long term goals. 80% of your work will come from your top 20% of your clients. You have to figure out who those clients are. It’s called the 80/20 rule. Focusing on the right clients to get the right revenue is a huge part of maximizing your business.
There are many different kinds of investors you can bring into your business. Venture capitalists are one avenue. They essentially use other people’s money to invest in attractive companies. They like to see your revenues and profits and they like to see that you have a long-term vision. Angle investors are similar but they usually invest early in the company and are willing to take a chance on a new company in exchange for a larger stake. Another type of investment is crowd-sourcing. This is relatively new and leverages the power of the internet to get many small investors. Australia has not yet allowed this form if investment but its only a matter of time before those laws change. Family and friends are another major source of investment in companies. Agreements must be in place in these situations to make sure you’re protected if disagreements arise.
There are many ways you can use investment to build your business. It can provide the tools and experience of the investor that can assist with major decisions. Having someone to bounce ideas off of can be invaluable. Getting a cash injection is really important but it’s not the only reason for bringing on an investor. There can be some disadvantages of course. Losing equity in the business can also mean you’re losing some control. The investor is now going to have a say in how your firm operates.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
Show 046 – Fast Fix Monday – Happy New Year 2018.
Show Notes
Happy New Year everyone and welcome to 2018! Because it’s New Year’s Day today’s edition of Fast Fix Monday is going to a short one. We have a lot planned for the coming 12 months. We want to help make the coming year the best yet! On Wednesday we will return with an all episode of the Business Legal Lifecycle Podcast. We hope you’ll join us.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 045 – Business Legal Lifecycle in 2018 originally broadcast on Facebook Live on Wednesday 27 December 2017 we explore this interesting topic.
Show Notes
It’s the last show of 2017! We wanted to use this episode to recap some of what we have spoken about over the last year. And we want to give you a preview of what you can expect in 2018. We have been building The Business Legal Lifecycle for a while now but we now want to expand into other countries. Our goal is to offer low-cost and easily understood legal advice for everyone.
One of the new products we are going to roll out this year is a free test. The test will give you some really valuable information about where you are in your business and where you need to go. The BLL is divided into four different sections. It outlines what you need at the beginning middle and end of your businesses life. The first focusses on the start-up phase. The second is on the consolidation phase. The third deals with scaling up the business. And the fourth and last section talks about the business exit phase. We are working on new books that will expand on each of those sections and will provide more detail. Each of those books will be released this year.
Our international expansion is well under way. We are already collaborating with a lawyer in the UK to develop a UK specific version of the BLL. We also want to bring additional versions to the US and Canada. Our long-term goal is to take this product worldwide.
BLL TV and the podcast are also going to continue through 2018. We are going to bring you a lot of new interviews with many business experts.
January
We are going to be focussing on Phase 6 of the BLL which is all about maximizing your current business and bringing in new investors. We are going to detail the best ways to get the most out of your current business model. Investors are a big part of expanding the business. Dan Holden will be one of our guests on investors. Dan has a lot of experience on how to maximize and grow a business using shareholders agreements.
February
We are going to discuss Phase 9 in February which is about real estate investments and investments in general. Investing in property is a great strategy for increasing your capital. To that end we will detail how to deal with real estate agents. We are also going to show why investing in property early in the business is often a good idea.
March
Most business owners have a long term plan of selling the business. In March we are going to discuss the best ways to prepare your business for that sale. Maximizing the sale price is hugely important. There are many individual parts of the business that need to be prepared for an eventual sale. It isn’t always easy to do that but we are going to give you a step-by-step guide.
April
No business owner wants to even think about the possibility of their firm going under. But if that misfortune should occur you need to do it right. April will all be about insolvency and the best ways to wind-up the business. Understanding this process can be difficult. The consequences of bankruptcy and insolvency can be severe so you need to educate yourself.
May
We will cover Phase 4 in May. It’s all about bringing on employees and how to do that correctly. The costs of an unfair dismissal lawsuit can be high. Having your employment agreements in place is hugely important. You have many obligations when hiring people. Detailing their rights and responsibilities must be done in accordance with the law. If you don’t do this right from the start you could be headed for trouble down the road.
June
It’s the end of the financial year in June and we will be discussing dispute resolution that month. The debt recovery process is really important at the end of the year and you may have to take people to court. Litigation can be avoided using a dispute resolution process that will save you a lot of money in the end.
July
July will mark the one year anniversary of BLL TV and we will be doing something a little different that month. We will be discussing both Phase 8: Estate Planning and Phase 12: Retirement. Retiring can mean selling the business or winding down the business if a sale can’t be made. Estate planning is really important for the succession plan of the business. If something were to happen to you clearly detailing who should get the business is really important.
August
We are going to be discussing with many of the business owners who have been helped by the BLL in August. We are also going to be talking about how the BLL applies in other countries around the world.
We’re really excited about the upcoming year and we hope to provide you with excellent legal value over the next 12 months and beyond!
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 044 – the Debt Recovery Process originally broadcast on Facebook Live on Wednesday 20 December 2017 we explore this interesting topic.
Show Notes
Today on the show we are going to continue our conversation about debt recovery. This conversations fits nicely into Phase 3: Initial Clients. The reason is simple. Without paying clients you don’t have a business. Cash in king when running any business and if your cash flow is too low you risk shutting down. We always recommend that you get paid up-front. That isn’t always possible however. That’s when debt collection becomes absolutely critical.
Whenever you’re providing goods or services ahead of time you have to create an internal debt collections process. You should have a specific staff member tasked with carrying out the debt collection process. If you follow a regimented process delinquencies are going to decrease and that means more money for your business. That process should include the following steps:
- Send an invoice with the expected date of payment
- Then in the event of non-payment send a second letter requesting payment
- If payment still has not been paid a phone call requesting payment should be made
As part of your team you should have a professional in the debt collection industry. Having someone with some expertise is really important to ensure payment. Outsourcing this kind of work is going to be more effective and is going to save you a lot of time in the long run. The details of how the debt collection process will work should be detailed in the terms of service portion of your contracts.
The debt collection guidelines in Australia detail how this process should take place. The guidelines are quite broad and you should seek a lawyer before crafting your policy. There are rules around contacting a debtor. You have to have a reasonable belief that the method you are using to contact the debtor is the correct one. It is also illegal to make contact with a debtor by falsifying your identity. You have to be who you say you are. You also have to make contact at reasonable intervals. You can’t call them 15 times a day. These rules are in place to protect people from over-zealous debt collectors.
The rules around debt collection are incredibly important. You don’t want to fall afoul of the ACCC. Getting your debt collection process in place early on is hugely important for the future success of your business.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
