Top tips for protecting and maximising your business interests in a recession

In these uncertain times, it pays to invest in having some legal advice on your contract terms and for an analysis of any existing contracts

• Review your existing contracts – there may be a number of clauses which assist you and looking at your contracts may give you the impetus to seek to renegotiate
• Termination – there may be opportunities for you to exit from onerous contracts and to negotiate a favourable exit
• With a contract for the supply of goods, don’t keep delivering goods until the counterparty doesn’t pay. Tighten up all your procedures and look at options for possibly requiring payment up front or suspending services or delivery
• Have a plan B in place which recognizes the uncertain times, such as a plan for reclaiming goods from a customer who doesn’t pay and what you will then do with that stock
• Regularly review  and scrutinize your credit limits and payment terms with customers and seek to agree that you have the right to do this with any ongoing contract. Also review and re-check your customer’s credit ratings and industry news about them in an organized, diarised way
• Spend the time and money getting your contracts tailored by a good lawyer, which can be vital if you sell unfinished goods – you should have a very carefully drafted retention of title clause to prevent title passing in goods which have not been paid for, so you can reclaim those goods and avoid them being swallowed up by creditors generally in an.
• Protect your business by taking action and creating a paper trail if your customer defaults and may be in danger of becoming insolvent – if you then get paid, you need to guard against an argument that you have been paid in preference to other creditors. Demonstrating that the insolvent business had to pay you to try and continue it’s trading may protect you and a paper trail, where you threaten to stop supplying goods or services may assist in defeating an argument by other creditors that you have been preferentially treated.