Page 19 - MPA

Plumbers have had enough
What can you do?
Public Record Review
• Conduct the relevant searches on your potential client on government databases available to the public. Namely, ASIC , Personal Property Securities Register (“PPSR”), Land Title Search (“LTO”) etc.
• The information obtained may give you an insight into the potential client’s current financial credibility.
Terms of Trade
• Always ensure you have comprehensive terms of trade that you issue to new clients with every quotation and tender. It is important that your terms of trade are properly documented, that they adequately protect your business legally and that they are legally binding between your business and your new client.
• At times, contractual relationships are established merely through discussions or a gentleman’s handshake. This is not a bulletproof arrangement. Parties can avoid any likely dispute in the future simply by setting out a clear and concise written terms of trade from the start before work is commenced.
• Your terms of trade with your potential client must cover key clauses such as clear payment terms, limitation of liability, indemnity, guarantee, variations, ownership of goods etc.
• There is no one size fit’s all standard terms of trade. For complex transactions, it is advisable for you to consult a lawyer to draw up a comprehensive agreement to safeguard your interest and prevent bad debts. A small investment in legal advice to ensure you get your terms of trade and contracts right to prevent a potential greater business loss is a wise investment for all businesses.
Conduct Credit Check
• Conduct a credit check on your potential new client. For a small fee, you can contact a credit bureau to carry out a creditworthiness check on an individual or business.
• This vital information will assist you in making a more informed business decision with a particular individual or business, particularly if they have a negative credit report in relation to the payment of debts to third parties.
Insurance
• To further mitigate your business risk you may consider investing in Debtors or Trade Credit insurance. This insurance protects your cash-flow by covering your losses if a debtor defaults on payment or becomes insolvent, giving you the peace of mind to focus on running your business.
• You may wish to speak to an insurance agent/broker to obtain comprehensive information on the same.
• •
• •
• •
•
Reputational Review
Leverage the wealth of information available online to gather more data about your potential client.
Also, consider requesting the details of past customers of your potential client. If they are provided consider touching base via telephone calls or a personal visit with those past customers identified/provided, and ask them about their experience in dealing with your potential client and whether there were any issues in relation to being paid what was claimed on time.
If possible, seek verification from third-parties such as state licensing bodies, suppliers, etc.
This check will give you an insight into your potential client’s background and reputation.
Invoicing
Have a disciplined invoicing process in place. And of course, invoice as early and as often as possible.
If your potential client is a builder, consider incorporating the following phrase in your invoice “This is a payment claim made under the Building and Construction Industry Security of Payment Act” pursuant to the Building and Construction Industry Security of Payment Act 2009 (SA)
The intention of the Act and the phrase is to ensure a party is paid for the work that they do on time. There are strict time frame requirements in which things must be done when an invoice you issue has the above wording on it. If those things are not done within the required timeframe it allows you to take certain steps to recover amounts owed to you under the Building and Construction Industry Security of Payment Act 2009 (SA)
17