What to Do When People Or Corporations Owe You Money
When you operate your own business, it can often be difficult to make ends meet on a day-to-day basis. Your financial projections will take into account money that is owed to you by individuals or corporations and the receipt of this money will have clear implications when it comes to your cash flow. So, it goes without saying that people who refuse to pay can place you under great hardship. What options do you have to consider?
Preparatory Work
Before you take any formal action, it is likely that you have already spoken with the individual or corporation through a variety of measures like phone calls or emails. You may not, however, have issued what amounts to a formal demand for payment, which should be your next step.
Going after the Individual
If the offender is an individual, you need to draft a specific letter of demand. This shouldn't include any "fluff" or information that is not very specific to the nature of the debt. It needs to be properly drafted, be unambiguous and show why the specific debt is late. This type of letter needs to be sent by registered post, so that you have proof it was delivered. Usually, the debtor has three weeks in which to respond, ideally with the payment. If you don't get satisfaction in this time, then you can start proceedings in either the magistrate, district or even Supreme Court depending on the scale of the amount owed.
Pursuing the Corporation
If a company owes you money as opposed to an individual, then you need to issue a different type of document known as the "creditor's statutory demand." Once again, this has to be written in a certain fashion and must be formally delivered. The corporation will have a similar amount of time in which to respond. If they don't do so to your satisfaction, then in this case they will be determined to have committed an insolvency act, under the Corporations Act in Australia.
Using the Big Stick
Once proceedings have been commenced through the courts, then there is a probability of serious consequences for the individual or corporation. The individual can be made bankrupt and the corporation can be dissolved, and these potential outcomes are usually sufficient to prompt their actions. After all, the company doesn't want to be dissolved have no say over its future. Similarly, the individual doesn't want to have all of his or her assets placed under the order of the court. It's remarkable where money can be found to pay your debt with this type of threat on hand.
Moving Forward
Remember that you have to follow a specific procedure and must make sure that the demands for payment are sent out in a given format. If you've exhausted your patience and want to continue to pursue your debt, then a solicitor can help you to draw up the details.