In our final episode in this series…
We discuss how lack of communication during trading can result in catastrophic financial consequences for businesses. We also look at the reasons behind an increasing number of entities now seeking alternative dispute resolution methods.
Forensic Services have dealt with multiple dispute cases where parties have irreconcilable differences. Often they have taken steps to actively prevent disclosure of relevant and timely information to the parties involved. This blocks any potential settlement purely from an emotional desire to cause the other party frustration and cost.
The economic climate means all businesses control costs tightly. Any escalation in a dispute or threat of non-payment from a customer can have a significant effect on the continued operation of an entity. To ignore the reality and potentially serious nature of a dispute or loss may have severe financial consequences. However, many bury their head in the sand and never fully recover to their previous financial position.
Many SMEs and owner managed, family businesses do not have the resources or expertise to immediately assess the full extent of a loss. They may ultimately fail if they do not take proper advice. A delay in action may prolong the stress of the dispute and possibly introduce further complications.
We have dealt with cases where businesses have rapidly declined as a result of losses suffered. Some shareholders will personally introduce large cash sums in order to keep trading, ensuring staff wages are still paid when cash flow may be poor. Forensic Experts specialise in calculating losses to owner managed businesses. This includes indirect losses sustained as a result of trading disputes. They are not immediately obvious but may significantly impact on business growth, profitability, or opportunities lost.
Clashes between company and customer, supplier or subcontractor, are prevalent in the construction industry. Losses in contract disputes often involve sums in the hundreds of thousands. However, larger entities often have additional resources to enable them to mitigate such losses.
Forensic Services have dealt with multiple contract dispute cases in construction and manufacturing, and Tait Walker’s specialist Property and Construction Group is experienced in advising on all aspects of commercial trading affecting businesses operating in these sectors.
The construction industry favours alternative dispute resolution methods, including mediation or arbitration. This achieves a swift settlement to ease cashflow, avoid Court costs, minimise business disruption and enable contract work to continue on major projects in the public or private sector.
The Court looks unfavourably on parties who do not attempt alternative dispute resolution. It is in all interests to attempt mediation prior to incurring the significant cost of Court proceedings. The involvement of experts at an early stage is critical to achieve an equitable settlement and preserve continuity of trading. Quantifying the loss at an early stage can assist in focusing the settlement negotiations. This is ultimately the best result for all parties.
Falling out over Finances, Summary
Our Forensic blog ‘Falling out over Finances’ is a five part blog series. It is aimed at anyone who has been involved in a dispute that has impacted their financial situation.
We have looked at different types of disputes as well as the possible outcomes and methods of resolution. We have also discussed the ‘red flags’ that may prevent you and those around you from falling out over finances. In our experience, financial disagreements affect individuals through to the largest companies. If those involved take professional advice quickly, the dispute will likely not escalate.
If you have missed our five part blog series ‘Falling out over Finances’, all episodes are available on our website:
If you have been affected by any of the issues discussed, or would like further information, please contact our Forensic Services Team on 0191 285 1321 for a no obligation discussion.