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Lawsuits, Your Business, And The Best Course Of Action To Take

It’s a small business’s nightmare, filled with potential expenses, reputational harm and significant hardship down the road. Being sued or under the threat of a lawsuit for a small business can be a breaking point.

It’s normal to feel overwhelmed, upset and indignant, but if you want to keep your business and its reputation intact during this time, it’s important to take the following into account and employ them as needed.

Here’s what to do if you’re worried about getting sued or are in the process of having a suit filed against them.

Open Your Communications With The Suing Party

The notification of a lawsuit should not be a surprise – it’s likely that you’ll have an inkling that this is the next step that is being taken from communication with a solicitor, a debt collector or the suing party (which could include a cease-and-desist letter, letter of demand or a notice of intention to sue).

How this stage is managed is critical.

It might be tempting, but do not ignore this communication. Serious implications could happen for ignoring it, and the matter could escalate instead. .

Having open communications at this stage could mean that the matter is resolved without it escalating further and the courts getting involved. Not only will this save you time, stress and money, but it could also lead to a quicker and more amicable outcome between the parties.

Consult With A Legal Professional

The moment that you have received notice that you are to be sued, speak with a lawyer. They are experts at dealing with this kind of matter and can provide you with clarity around your next steps and possible outcomes.

Record-Keeping

Check the documents that are served to you to see if they have been issued by a court. The document should have the name of the court and a court stamp, a court number and details of what will happen if you do not respond by a deadline. Maintain a detailed timeline of dates you receive all communication, dates that need to be rescinded by and the dates of all responses.

Compile Your Evidence

It may be expected of you to recall details from a certain period of time. Start detailing everything about the matters that you can remember, as this will assist you when communicating with your lawyer, when gathering evidence and when filing a response or defence.

Make copies of all evidence that you collect that may be relevant so that you are prepared and can provide detailed copies to your lawyer. This could include emails, documents, files, notes or records.

Communicate Only With Your Lawyer About The Matter

It might be tempting to unload some of the stress about the suit to your loved ones, but there are certain communications with others that may not be confidential and could be used as evidence. A text message to your friend about the situation could be pulled in as evidence (potentially). If you have questions about who you can communicate with, ask your lawyer.

Take Preventative Measures For The Future

Take steps to reduce your likelihood of being sued in future or of being put in a similar position again. This may involve reviewing your business structure or financial situation, having comprehensive insurance or having proper checks and balances in place.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier