Recently we were involved in a situation where our client was owed hundreds of thousands of dollars for work done, but it turned out that it had not properly identified who its customer was.
When the work was arranged the assumption had been made that the customer was the person our client’s employee had spoken to arrange the work, but on the evidence available at a preliminary hearing, this proved not to be the case.
The customer was in fact a company owned by the person our client had spoken to.
Fortunately, at that early stage we were still able to amend the proceedings to name the correct defendant, but the additional legal cost our client incurred, and the delay, could have been avoided by taking some extra precautions, and in some situations the consequences could have been a lot worse.
Most business people consider themselves careful when it comes to running their business. However, some fail the relatively simple clerical task of ensuring that their customer and client details are correct. The effects have proven, from time to time, to be catastrophic for those people when faced with the unfortunate task of recovering money owed to them by the client/customer.
We have seen situations where there is no business contract at all with the person who has the ability to pay, or the assets, and the person or company contracted with has no assets and no ability to pay… game over!
To save yourself the frustration of not being paid for your hard work or incurring unnecessary additional costs, here are a few tips that might just go a long way toward making sure your bad debt write-offs are kept to a minimum:
Undertake a company search when dealing with a company to check that the ACN, ABN and other details given are correct. Doing so is as easy as visiting www.asic.gov.au
Take customer/client details from a drivers license if possible
Check the details given to you against White Pages or Yellow Pages records of the business just to make sure they are correct.
These tips might seem very simple, but they may be very helpful in ensuring that you have the correct details for the people and companies you trade with and avoid the frustration of not being able to recover your debts.