Compromise Settlements in Small Business Debt Disputes

Compromise Settlements in Small Business Debt Disputes

If you or someone you know are involved in a small business and have a debt dispute which needs sorting out, then you may like to read on.

When a small business has a debt dispute (whether chasing a debt or owing a debt) it can cause tension, angst and on occasion, a lot of personal stress. It may also take a small business owner’s focus away from other important aspects of the business. As such, for many small business owners, reaching a compromise settlement at an early stage (if possible) is often a pragmatic and commercially sensible approach for both financial and non-financial reasons.

What is the ‘correct’ approach will vary from case to case, and person to person. For example, on occasion there will be a desire (or need) to preserve a commercial relationship or arrangement and therefore handling these types of disputes with care becomes paramount. However, on other occasions there may be no desire (or need) to preserve a commercial relationship and in those cases a slightly hardened approach may be taken.

Reaching a compromise settlement is of course the first step, documenting it so that it is enforceable and legally binding is another. This is often an important step which is overlooked by many small business owners. Unfortunately, disputes can and do arise in relation to supposed ‘settlements’ where one of the parties had thought an agreement had been otherwise finalised, only to find that the other party comes back again for round two. As such, what is appropriate documentation of a settlement will vary from matter to matter and can range from a formal Deed of Settlement to a more simple exchange of letters.

The takeaway message from the above is that rather than letting a dispute simmer (or hoping that a settlement has been finalised only to find out down the track that it hasn’t been) it is often best to take a proactive approach and seek to resolve it in a timely manner.

If you have read this far and think that you need some practical advice or assistance in relation to your situation, then now is probably the time to get in touch. Austral Legal can help and we offer an initial discounted 30-minute SmartMove appointment for $80 by phone or in person at our office. Bookings can be made online through our website or simply by phoning our office on 08 9745 9550. Once we have a handle on what is required, we may well be able to offer a fixed fee for any further legal services, giving you cost certainty from the start. Austral Legal. Practical advice.