Know your client
You run a small business where margins are tight. Do you want to give away your product for nothing?
One of the biggest issues in business involves knowing who you are dealing with. Is your customer a company? An individual operating through a business name? The trustee of a trading trust? A partnership? Are you dealing with the principal of the business or one of their employees?
Too often in litigation, we are presented with invoices made out to “Bloggs Plumbing” or just plain “Angela Bloggs”. On investigation, Bloggs Plumbing turns out to be operated by “The trustee of the Bloggs Unit Trust” with no indication as to who that trustee might be. Or, Angela Bloggs turns out to be Angelo Biggs because the salesperson was sloppy with their paper work. While these problems might be able to be resolved, they will contribute to extra expense in legal proceedings.
Even if you don’t advance credit to clients, it is still important to know who you are dealing with. A simple client information form, which asks questions as to who you are dealing with, will make things a little bit easier if you are put in the position where you need to take legal proceedings. If you are advancing credit to clients, it is critical that you have a properly set up credit agreement with sufficient information for you to be able to identify the entity you need to sue and protections that will maximise your chances of recovering the amount owed to you.