Tighten Contracts Ahead of Recession

Whether 2008 will actually see the UK economy move into recession is up for debate, but one insolvency specialist warns small businesses to tighten business terms ahead of stormy weather.

According to Sunil Abbi, commercial and litigation solicitor at Black Country law firm Higgs & Sons, all businesses should be revisiting their terms of business to prevent perfectly healthy companies failing as a result of a liquidation domino effect.  This was seen in the last recession when many firms were unable to meet orders or keep cash flow alive as suppliers or customers went bust.

Two key pieces of advice for SMEs wishing to give themselves some protection should a 2008 recession arrive are:

• include a retention of title clause in any contract, enabling businesses to reclaim unused stocks supplied to an insolvent company, if goods are not paid for, and;
• confirm oral agreement in writing at the earliest possible opportunity.