How can I determine if a company is financially sound before conducting business with them?

Before dealing with a company, it is important to conduct due diligence to assess its financial soundness. This can include reviewing financial statements, assessing credit ratings, checking for any legal or regulatory issues, and examining the company's reputation in the industry. While due diligence cannot guarantee complete protection against insolvency, it can provide a good starting point for evaluating the company's financial health.

What should I do if a company refuses to pay its outstanding invoices?

If a company fails to pay its outstanding invoices past the due date, there are several steps you can take to recover the unpaid amount. First, ensure that all your documentation is in order, including proof of completing your contractual obligations and issuing a tax invoice. Depending on the amount owed, you may consider issuing a Statutory Demand, which is a formal request for payment within a specific period. Seeking legal advice before proceeding is recommended, as each case is unique and may require a tailored approach.

What is a Statutory Demand, and how does it work?

A Statutory Demand is a creditor's written request, prepared using the prescribed form, demanding payment of a debt within a specified statutory period (currently 21 days). If a company fails to comply with the Statutory Demand within the prescribed time, it is deemed insolvent under the Corporations Act. The creditor who served the demand can then use the presumption of insolvency to apply to the Court for orders to wind up the company within three months of the non-compliance.

What are the requirements for issuing a Statutory Demand?

To issue a Statutory Demand, the debt owed must be at least $4,000, and the demand must be prepared using the prescribed form. It must be served on the company in accordance with the relevant provisions of the Corporations Act. It's important to ensure that the company has identifiable assets, unencumbered by other creditors, with a value greater than the amount owed before considering this course of action.

Is a Statutory Demand suitable for all cases of unpaid invoices?

The suitability of a Statutory Demand depends on the specific circumstances of each case. It is advisable to seek legal advice before considering this option. While a Statutory Demand can be an effective alternative to traditional litigation, it may not be suitable if the debtor company is already insolvent and has no assets. Consulting with professionals experienced in insolvency law can help determine the best course of action based on the facts of your case.

Tag: Statutory Demand function

When a company owes you and does not pay Tired of Re-sending Invoices?

This article aims to individuals and business owners who may have conducted business with a company but the company refuses to does not pay its outstanding invoices past its due...

By Aylward Game Jun 8, 2023 Litigation

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