COVID-19: Tips to maintain positive cash flow in your business
The novel Coronavirus (COVID-19) has had a profound impact on the Australian economy and local Australian businesses. Even though we are wading through unprecedented times, businesses are still trading, and businesses need to generate cash flow in order to keep doing so.
Our article explores how you may maintain cash flow by looking into approaches for debt recovery and preserving assets from creditors during the COVID-19 pandemic in Australia.
How can I get my debtors to pay?
Ordinarily, if your debtor is not paying within ordinary business terms, you could turn to us, as your lawyers, to commence the legal recovery process. Whilst letters of demand are often effective, it is fair to say that they may not be the best tool to use during these unprecedented times. These letters are blunt, devoid of understanding, and always threaten legal action. We expect many debtors will simply see such an approach as the last straw and the actions of a business that does not wish to assist the recovery of their business in the interests of a future relationship. If they can pay you in due course, they might, but it won’t likely be as a priority.
The key to recovering debts during this time of uncertainty is to be flexible and, if possible, sympathetic. If you are willing to be flexible, solutions can be designed. For example, this may include, reaching out to your debtors by sending a special letter, which does not demand money, nor does it threaten legal action. The letter will touch on the unprecedented times we are all facing, the need for us all to support each other, and will invite your debtors to get in contact to negotiate a settlement or payment plan.
Many debtors may avoid you for fear that you will not accept any payment but the debt that is owed, in full. If debtors know that you are open to negotiation and alternative payment arrangements, it may open the lines of communication and could ultimately result in the debt being paid in a manner that suits you, your business needs and those of your debtors.
However, if you have exhausted the options available to you, then legal action may be necessary. With the various COVID-19 protocols giving debtors more time to pay, you don’t want to be last in line either.
Do you need help paying your creditors?
If you find that your business has been left with a list of creditors, and you are struggling to pay them, you are not alone. We understand that times are tough and that you need to not only pay your creditors, but also your staff.
For our clients in this situation, we have found ourselves crafting letters, to be sent to our client’s creditors. The idea behind such a letter is to redirect their focus away from you so that you can focus on alternative income streams/cash flow and/or recovery of your income streams/cash flow, and grant you extra time to pay your debts. If your creditors demand money, effective procedures can be created to negotiate settlements on your behalf so that in the end, you save money.
How can DSA Law help?
Please do not hesitate to get in touch with one of our friendly staff to discuss your debtors and/or creditors. Alternatively, please feel free to contact our office on 03 8595 9580 or by going on our Website.