From a lawyer: The four things every business should review and update now

In the day-to-day hustle and bustle of a busy business it is easy to set and forget much of your administrative paperwork. Unfortunately, when things go wrong, this paperwork becomes critical. 

As such, every business should be reviewing and updating these critical areas before the year gets away from you.

1. Trade marks

It is essential that your trade marks are registered. 

You must regularly review your business for any:

• New trade marks which need registering. For example, new brands, business names, logos etc;
• Existing trade marks that are being used in a different way. Trade marks are registered under certain classes and if you are offering new goods or services, your trade mark may need to be registered under an additional class; and
• New jurisdictions. If you have expanded your operations internationally you may need to register your trade marks in more than just Australia.

You put yourself in a better position to protect and defend your trade mark if your registration is up to date. 

2. Terms and conditions

Are your terms and conditions (T&C’s) still fit for purpose? For example:

Do you charge interest? 

If you are finding that you have customers that are significantly late in paying outstanding invoices you may wish to charge interest. If it is not included in your T&C’s you may not be able to charge interest on overdue invoices.

Do your T&C’s cover COVID-19 related issues?

You should be specific as to what will occur if there are COVID-19 related delays or cancellations. Examples include shipping delays, employee shortages and government restrictions.  

3. Protect the money you have invested in the business 

Whether you’re doing this at the early stages of a business, when you purchase equipment or to support the restocking or staffing levels before a busy sales period, these funds can help improve cashflow. However, you should be careful to document how you have contributed funds to your business, as well as how much.

Consider documenting the investment of funds into your business as a secured loan, rather than recording the investment as equity. In this case documentation should be drafted in a finance agreement between the director/shareholder and the business entity as well as properly documented security. 

As a secured creditor you have priority over unsecured creditors if the business becomes insolvent and is placed into external administration. This is compared to an equity holders who rank after all unsecured creditors in the same situation. 

4. Registering security interests

Have you registered all security interests granted under the contract?

Many contracts give one party the ability to register their security interest on the Personal Proprieties Securities Act — failing to do so can have significant consequences if your customer is placed into liquidation. 

It is important to register any security interests quickly and correctly. 

As lawyers, we regularly deal with the unintended and unwelcome consequences of business owners not updating these critical documents. When things go wrong you put yourself in a much better position if you have the above administrative paperwork up-to-date. 

Catherine Ballantyne is a partner at Madgwicks Lawyers.