Having effective documentation in place will help ensure you have control over all of your business assets.
Consider the following:
Customers / Debtors
• Do you have effective Terms of Trade in place?
• Do your Terms of Trade contain a retention of title clause? Is it registered correctly?
• Have your clients completed Account Application Forms?
• Do you hold any security over your debtors? Is it registered correctly?
• Can you recover the cost of debt recovery from your client?
• Can you register a security over the goods you supply to your clients and the future income streams from them?
Many businesses use only a boiler plate Terms of Trade, often supplied by an industry body or redrafted from other suppliers or customers.
Terms of Trade correctly drafted and personalised for your business ensure that your business requirements and security needs are covered in all of your agreements with customers.
Completed Account Application Forms help ensure that your customers are aware and agree with your trading and security requirements.
In many circumstances security can be placed over both the outstanding values owed by your debtors and also over the goods previously supplied and the future income streams they derive.
Remember – security may only be actionable if the correct documentation and registration has been set in place as early as possible.
Stock and Equipment
• Do you supply or provide stock or equipment to associated entities?
Many company groups are setup such that stock and/or equipment is sold, leased or used by multiple entities of the group.
You need to ensure that you have contracts and systems in place which outline the owning entity and any terms or rights associated with the usage of the goods.
Adequate contracts can enable certainty of ownership and control over assets should future events involve any receivers or legal action against a member of the group.
Inadequate paperwork could see the seizure and sale of assets based upon the effective control of the assets should ownership not be able to be legally established.
Remember – ensuring that formalised contracts, with the appropriate security provisions and correct registration can help protect physical company assets.
Associated entity loans
• Do you provide loans or undocumented debtor agreements with other members of your corporate group?
Providing undocumented loans or debtor agreements with associated entities could place any payments made between the entities at risk of reversal and demand of repayment by a receiver or liquidator.
Not documenting loans and/or not correctly registering any security in relation to them could mean that a receiver or liquidator is able to demand the repayment of the funds
should they be deemed voidable transactions.
Remember – Don’t risk it. Ensuring that intercompany loans and agreements are properly documented and registered can help ensure that all payments are deemed to be nonvoidable by courts.
If you are unsure about any of these questions contact Simple Debts urgently.