Contracts do not need to be complicated or convoluted, but they do need the right Terms and Conditions in place to ensure your business is properly protected. A robust set of Terms and Conditions can eliminate loopholes and put your business in the best possible position to recoup monies owed.

Having appropriately worded Terms and Conditions can mean the difference between a successful recovery and a write-off.  

This article outlines theTerms and Conditions that trade credit suppliers should consider within the context of a Commercial Credit Agreement.

As all credit professionals know - credit, cashflow and collections all work together to protect the lifeblood of many businesses.  Without a proper functioning credit team, businesses run the risk of significant impacts on ongoing profitability and viability. 

Unfortunately, risk is an unavoidable part of the credit function. 

With this in mind, this article from Commercial Recovery and Insolvency Partner Chris Hadley and Special Counsel Andrew Tanna highlights how carefully considered credit terms can help to mitigate risk and provide safeguards to your business.

This piece was originally published in the Australian Institute of Credit Management's 2022 Risk Report published 30 May 2022).

Buy Now Pay Later (‘BNPL’) is a system of advancing funds to consumers for the purchase of goods and services, with repayments made in regular instalments. The consumer can take possession of the goods or services immediately.

Currently, BNPL advances are unregulated by consumer credit law, as no interest is charged on the advances. 

The National Consumer Credit Protection Act 2009 does not apply, and providers of BNPL finance are not required to meet the compliance requirements of that legislation.

Finance providers obtain a return on BNPL transactions via the collection of merchant fees (paid by vendors to the finance provider at the time of sale) and by recovery of fixed late fees by consumers if they default on their repayment schedule.

The Full Court of the Federal Court recently delivered its judgment in the matter of Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64.

The decision will undoubtedly have significant implications for the ongoing application of the peak indebtedness rule by creditors and liquidators.  

From 1 January 2021 new insolvency regimes will be introduced which will involve:

1. a new insolvency process for small businesses whereby financially distressed but viable companies can restructure their existing debts and continue to trade; and
2. a simplified liquidation process which will allow for faster and lower-cost liquidation.

The temporary measures put in place by the Government in March this year which:

1. increased the monetary threshold at which creditors can issue a Bankruptcy Notice to $20,000; and
2. increased the time period in which a recipient of a Bankruptcy Notice has to respond to a Statutory Demand from 21 days to 6 months,

have now been extended until 31 December 2020.