Author: Simon Walsh Experian’s announcement that 25% fewer firms became insolvent in August 2009 compared to July 2009 is welcome not only in its own right, but also because it continues a trend of positive economic indicators which has developed over the last month or so.  On top of this, the FTSE 100 is currently managing to stay above the 5000 mark and some big ticket M&A announcements regarding Cadbury’s and Kraft as well as T-Mobile and Orange have lead to more positive sentiment being expressed in many quarters. Such upbeat comment can only be welcomed after the plethora of bad news which has been dolled out for so many months and whilst no one is prepared to call recent events as a recovery, the signs are increasingly that there are more opportunities for businesses to exploit if they can position themselves correctly.  However, such opportunities must always be looked at in context and deals should not be done at any price.  Proper customer/product due diligence is still required and, if anything, greater care should be taken in the current climate because dealing with disputes when human and financial resources are under more pressure than ever can quickly have a disproportionate and counterproductive effect on a business. Simple steps that we are currently seeing being overlooked when contracts are being negotiated include:- Not taking steps properly to investigate a potential customer’s or supplier’s financial standing. Accepting your customer’s or supplier’s terms and conditions without either asking to see these where they are simply referred to on a purchase order or giving them the proper attention they warrant if they are provided. Not seeking to assert your own terms and conditions in place of, or alongside, your customer’s / supplier’s terms and thereby losing the protection of valuable limitation and/or exclusion provisions or, worse, more generous payment terms. There will always be cases where there is very limited scope for negotiation.  However, our experience suggests that both suppliers and buyers recognise that in the current climate more realistic provisions have to be taken to secure a signature on an order form and a few simple questions can often lead to more favourable terms being secured which could well pay dividends and avoid potentially costly problems further down the line should unanticipated problems arise.

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Insolvencies Fall, But Care Is Still Needed

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