Disputes often arise during the normal course of business and can range from the non-payment of debts from customers, contractual disputes with suppliers or landlords to litigation and employee claims. Recent surveys have highlighted a growth in the level of disputes that businesses experience, and this is likely to be an ongoing trend.
While the majority of disputes can normally be agreed in an amicable way without consequences to your business, more severe disputes can have negative implications upon your business.
While dealing with disputes will take up valuable management time and prevent you from running your business, the impact on cash flow is often overlooked, which may lead to your business running out of cash. Consideration should be given to the legal costs to defend claims and the impact on available cash, especially if this results in the write off of significant debtor receipts or the payment of substantial and potentially disputed creditor sums.
There may additionally be the risk of parties seeking to take enforcement action if a dispute cannot be settled and payments agreed, which may result in cash flow difficulties and business failure.
The management of disputes is key to avoid future challenges and manage cash and there is a need to engage with the concerned parties in order to reach an amicable solution, preserve cash and avoid onerous costs and potential future adverse actions.
The following points and options should be considered when determining how to deal with a dispute:
- Who is the dispute with, and what are the implications for the business if one can't reach a resolution?
- Regarding the non-payment of debts, what enforcement actions are available to you, and what leverage can you apply to recover these debts?
- Consider the use of an advisor who can act as a mediator and provide independent advice to find a solution. This may include working with all parties to highlight the impact of the actions taken to date and provide greater insight into the benefits of a commercial solution.
- Set up protective mechanisms to shelter your business from any adverse actions from parties and to provide time to consider alternate options.
We work with companies to help them resolve disputes by working with both parties to find an amicable solution. Please contact us to find out how we can help.