In our final episode in this series…….
We discuss how the lack of collaboration and communication in the ordinary course of trading can potentially result in catastrophic financial consequences for businesses, and 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 and have taken steps to actively prevent disclosure of relevant and timely information to the parties involved, effectively blocking any potential settlement being reached purely from an emotional desire to cause the other party frustration and cost.
The economic climate means all businesses control costs tightly, where any escalation in a dispute, leading to additional costs incurred, 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 are tempted to bury their head in the sand or muddle through to try and absorb the damage, never fully recovering to the financial position enjoyed previously.
Many SMEs and owner managed, family businesses do not have the resources or expertise to immediately assess the full extent of a loss arising as a result of a dispute, and may ultimately fail if proper advice is not taken. A delay in action may prolong the stress of the dispute and possibly introduce further complications due to the time elapsed since losses occurred, which could potentially have been resolved sooner and at reduced cost.
We have dealt with cases where businesses have rapidly declined as a result of losses suffered, and some shareholders will introduce large cash sums personally in order to keep trading, ensuring staff wages continue to be paid during a dispute when cash flow may be poor. Forensic Experts are specialists in calculating losses to owner managed businesses, including indirect losses sustained as a result of trading disputes which are not immediately obvious but may be significant consequential losses which impact on business growth, profitability, or opportunities lost.
Clashes between company and customer, supplier or subcontractor, are prevalent in the construction industry, and 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 is one which favours alternative dispute resolution methods in order to resolve disputes such as mediation or arbitration, and, taking a wholly commercial view, achieve 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.
Parties who do not attempt alternative dispute resolution are looked upon unfavourably by Court as it is perceived all reasonable steps have not been taken to resolve the dispute, therefore it is in all interests to attempt mediation prior to incurring the significant cost of Court proceedings. The involvement of experts and taking professional advice at an early stage of disputes is critical to achieving an equitable settlement and to preserve a continuity of trading for the long term. Quantifying the loss at an early stage can really assist in focusing the settlement negotiations which 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 aimed at anyone who has been involved in a dispute which has impacted on their financial situation.
We have looked at different types of disputes and explored the outcomes and methods of resolution which can be achieved, and the initial ‘red flags’ which may prevent you and those around you from falling out over finances. In our experience individuals through to the largest companies are affected by financial disagreements, and the best resolutions are often seen where appropriate professional advice is taken swiftly to prevent the dispute escalating and differences becoming irreconcilable.
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.