The current economic conditions for small business in South Australia are extremely tough, and we are increasingly seeing businesses incurring bad debts owed by suppliers, contractors, tenants and customers.
It is difficult enough running a small business in South Australia, and the impact of an outstanding debt on the business is not only unfair, it can also impact on the future viability of the business.
After all, this is money that belongs to you!
Therefore, small businesses need to be aware that there are effective options to pursue debts, and Lindbloms Lawyers can assist in this area.
Recently John Lewis from Lindbloms Lawyers successfully recovered a significant outstanding debt on behalf of a small business in South Australia. It was a very good outcome in our client’s favour, and only occurred after direct and swift legal action.
In this case, our client owns a small commercial property in Adelaide, and the tenant breached the lease and vacated the property with no notice, leaving our client with an empty property, a debt of over $30,000, and at that stage very little hope of recovering the debt.
Had it not been for our intervention, the debt would still be outstanding.
Although you may feel that a ‘polite reminder’ may be a good first step, our experience is generally that co-operation only occurs once legal action is underway.
The First Step
As a first step, we recommend a ‘letter of demand’ from a solicitor which can be personally served on the other party. The ‘letter of demand’ includes information such as:
• The amount owed;
• Why it is owed;
• How it was calculated;
• A time period for payment; and
• What further action will occur if no response or payment is made.
Any communication should be in writing so that it can be relied upon later.
The Next Step
If the matter needs to be elevated, this may include obtaining judgement against the party in the Magistrates Court, and further actions including a ‘warrant of sale’ on the person’s assets in order to recover the debt.
It is important to retain copies of all invoices, contracts, agreements, evidence of delivery and any other relevant documents and communication with the creditor.
Finally, by obtaining legal advice at an early stage, this is likely to increase the prospect of success in recovering the debt.
If your small business is owed money, contact John Lewis at Lindbloms Lawyers. John is a Solicitor with Lindbloms with over 20 years of experience in providing advice and direct involvement in small business.