My tenant moved out five days ago and is now getting all shirty about getting her deposit back. The problem is, she’s agreed to pay for a large window that her son cracked with a cricket ball – out of the deposit. My handyman is snowed under at the moment. He has ordered the glass but will only be repairing the window next week. Is there any deadline by which I have to repay her deposit, or can I wait until my handyman has finished the job?
When a debtor uses a myriad of excuses to delay payment for longer than three years… Sounds crazy, right? How does a creditor let a debt slide for three years without doing anything about it? But actually, it’s not as crazy as it sounds. Sometimes the debt is incurred in the course of a much larger, complex, more involved project, allowing the creditor to validate their payment delays until the project has been completed. And other times the creditor is just really, really good at coming up with believable excuses and unfulfilled promises that serve as little more than delaying tactics.
There’s one word that strikes fear in the hearts of business owners: Suretyship. It’s guaranteed to send them fleeing for the hills. Many businessmen and women have suffered untold abuse at the hands of creditors who have manipulated them using suretyships and guarantees. On the other hand, there’s many a creditor berating themselves for failing to get a suretyship before granting credit to their now defaulting debtor. Let’s face it: the suretyship can be a useful business tool. If used correctly, fairly and with clarity on the parameters. A suretyship can grant companies access to the credit they so desperately need, while giving creditors the comfort to release goods before payment is made. But there needs to be a balance between the competing interests of debtor and creditor. All too often we hear of creditors upsetting this balance by trying to claim more than what the surety originally bargained for.
By now, the January hangover has well and truly set in. The month-long December party has left many a bank account, kitchen cupboard and Jack Daniels bottle empty, and the next pay-cheque seems but on a distant horizon. Invariably there’re a few bills that are mistakenly or not-so-mistakenly overlooked. Which may suit you if you’re the debtor. But if you’re the creditor, what do you do? For the umpteenth time, you are the one left juggling your cash flow because your debtor has unilaterally decided to delay payment. At this point you may be seriously contemplating charging interest on overdue accounts. Adding interest onto outstanding balances can be a good way of forcing a debtor to pay on time. But before you do so, there are a few things you should be aware of.