The problem of bad debts is not a problem that is unique to construction firms. In many industries, customers either have a policy of seeking payment terms that allow them to wait as long as possible before paying invoices or they simply ignore invoices until being hauled into court.
A question we sometimes receive from our small and medium size business clients is what actions they should take when a customer or vendor files for insolvency proceedings while still owing them money.
In the event a corporate debtor owes you or your business money, Australian law provides a remedy known as a statutory demand to help creditors recover unpaid monies from corporate debtors. A statutory demand is a procedure by which the creditor, in this case your business, puts the debtor on notice that he or she is in default on a debt by serving an official notice.
Are you an Australian business owner who is drowning in debt and in need of assistance in dealing with numerous creditors threatening to file lawsuits against you or put your business into involuntary insolvency proceedings? An automatic stay may provide some relief.
Whatever type of financing your business depends on to make payroll and provide you with sufficient working capital to operate your business, it is almost inevitable that your business will hit hard times at some point. It is a natural part of the business cycle and is not cause for undue alarm or panic. It is the attitude that your creditors take towards any financial troubles which ultimately will determine the future of your business from a legal perspective.