Businesses beware – Do you really know your customers?
Before conducting business with anyone, it is very important to know who you are dealing with and what type of business you are dealing with. If the legal entity name and type of business structure is not clearly established prior to conducting business, the chance to successfully recover a debt declines significantly.
It is important that before you open an account or extend credit for your customer, you verify that your customer is a trust, a company, a partnership or a sole trader. Each of these business types have different legal structures and very different collection action is applicable to each type.
A company is a separate legal entity capable of holding assets in its own name. The two main participants in a company are the shareholders and the directors. The shareholders are the owners of the business and the ones who put the capital into the business. A company will always end with ‘Pty Ltd’ and have an ACN registered with ASIC.
A business can be owned by either a company or one or more individuals, or by a trust. If a business is registered in Australia, it will have an Australian Business Number (ABN) and its legal entity is able to be verified using the ABN.
When a legal entity is unclear, it is more difficult to recover your debt. Debt recovery can be very stressful to you and your business. If your business is having significant problems in a debt or credit recovery case, it is important to seek professional advice to be informed on the accessible procedures and ensure you pursue all the options available. At The Quinn Group, our team of experienced Lawyers and Accountants are dedicated to providing specialist and comprehensive debt recovery services. Submit an online enquiry for more information or call us on +61 2 9223 9166 to book an appointment.