I WANT MY TAX INVOICE PAID. WHAT CAN I DO?
NOT HAVING YOUR TAX INVOICE PAID CAN HAVE A DETRIMENTAL EFFECT ON YOU OR YOUR BUSINESS
Whether you are an individual or whether you run a small or medium business, cashflow is vital to your business. So, when someone who owes you money for goods and/or services that you have provided to them, and they are refusing or failing to pay you, then you have to come to a decision on what to do about it.
First and foremost, it is important that you minimise the risk of not getting paid for your goods and/or services. If you can, you should always:
check the credit worthiness of the individual or company that you will be providing the goods and/or services to;
seek credit references from other entities who have done business with them;
have fair and clear terms of trade provided to them, and have them sigh either a contract or a tax invoice that details the trade terms, so that they have notice of your credit terms;
if dealing with a company have the director(s) signa Director Guarantee; and
have sound account keeping procedures in place.
As they say, prevention is better than cure.
You should always pursue the money owed to you diligently. This means that as soon as the money becomes due, you follow it up, and do not put it in the “too hard basket” or “I will get to it tomorrow”. If the money is not pursued, then the debtor thinks that you will not follow it up. If they say they cannot pay you, do not just accept this, most debtors will use every excuse in the book not to pay what they owe.
It is important that you produce evidence that the money is owed to you, therefore you must have evidence of the tax invoice, and any communication in respect to the money that is owed. If the matter goes to Court then you will need this evidence to prove your claim against the debtor.
If after you have sent the debtor reminder letters and the debtor fails or refuses to pay your tax invoice then in the first place you should instruct a solicitor to send a Final Notice of Claim to the debtor. This usually persuades the debtor that you are serious in having your tax invoice paid and will usually persuade the debtor to pay or enter into a payment plan.
If you are owed money, then before commencing you need to consider if you are likely to recover the money and also the cost to you in recovering the money owed to you. Your solicitor will be able to advise you, based on the amount owed to you, what your changes of recovering the money are and how much it may cost you to recover your money. If you are successful in recovering your money through the Court, you will be awarded legal costs, however this is not always the case, and you may not recover all of your legal costs.
If you are owed money then you must commence any legal proceedings within 6 years from the time that the debtor was to have paid you (that is from the time of the breach of the agreement).
If you decide to commence legal proceedings, then depending on the amount that you are owed, there are different Court Rules that apply. For example, in South Australia, if you are owed less than $12,000.00 then solicitors are not allowed to represent you in Court. However, a solicitor may assist you in writing your Claim and advise you on enforcing any judgment that you may obtain, that is to get your money from the debtor.
Whether you are owed money personally or whether you are owed money from a company, there are usually methods by which you can recover the money owed to you, however there are differences in methods for individuals or partnerships and for companies.
Depending on whether it’s an individual or a company that owes you the money, the following are the various methods by which you could seek to recover monies owed to you: –
Issue a money claim against the party (company or individual)that owes you the money. The Magistrates Court deals with amounts up to $100,000.00 and the District Court with amounts greater than $100,000.00.
Serve a Statutory Demand, if a company owes the debt, on the owing party. This step should only be taken if the debt is not disputed by the company.. If a Statutory Demand is served, and the company does not either seek to set aside the Statutory Demand, or does not pay it within the 21days, then you can seek to wind up the company.
For further discussion about how, when and whether you can bring a claim for recovery of monies owed to you, speak with Toni Monteleone by contacting him on 8151 2315 or toni@montlegal.com.au.