Thanks to COVID-19, we are trading in an economy with an unprecedented level of risk.
In this period there are seven vital questions every business providing credit should be asking.
- Cash is king! Do you have an effective strategy in place to recover your outstanding debts?
- Commercial disputes are high risk. What is your business plan to avoid the risk of a dispute (and resolve unavoidable disputes)?
- Security is one of the best forms of protection and risk mitigation. Can you implement additional security or take steps to enforce your current security arrangements during this period?
- Insolvencies will increase as a result of COVID-19. Are you extending credit to customers who are at a high risk of becoming insolvent?
- A properly drafted credit agreement incorporating a personal guarantee is the single most effective tool available to businesses. Are your contractual documents valid and enforceable against your most at risk customers? When was the last time you conducted a contract review on your most at risk accounts?
- A defective PPSA registration can be fatal. When was the last time you reviewed your PPSA registrations – are you confident that they are correct?
- Repayments agreements are gold – if done well. Do you have a process in place to document repayment arrangements which improves your position in a default scenario while preserving your existing rights (including under a personal guarantee)?
We welcome the opportunity to assist your business manage this unprecedented level of risk.