What should you do when you haven’t been paid?

Cash flow is the lifeblood of every small business, which is why it’s challenging for businesses to meet their expenses when customers are slow to pay their bills.

Unfortunately, though, it’s a common problem, with more than half of Australia’s big businesses failing to pay their small suppliers on time, according to the latest data from the Payment Times Reporting Regulator.

The regulator found only:

• 47% of big businesses paid more than 80% of their suppliers by their own agreed payment deadline
• 31% of big businesses paid more than 80% of their small business invoices within 30 days (the benchmark set by the Business Council of Australia)

So what should you do if you’re chasing an unpaid debt?

Here are six steps you can take:

1. Review your contract to see when the payment was due
2. Give a friendly reminder that payment is due
3. Send a formal letter of demand (if the customer is unresponsive)
4. Consider mediation or other forms of dispute resolution
5. Use a debt collection agency
6. Take legal action

Prevention is better than cure. So to help protect your business from unpaid debt:

• Do your due diligence before entering an agreement with another business
• Have a written contract in place with clear payment terms and policies
• Get expert advice from a business lawyer

Adam Zuchowski is a disputes lawyer and principal at Sutton Laurence King Lawyers.

 Need expert advice on commercial law in Victoria? Contact Sutton Laurence King Lawyers today on 03 9070 9810 or for help.