Rule 2: No Name
Rule 2 is a seemingly obvious rule but one easily overlooked or given little thought to.
Don’t put YOUR name on it
When dealing with creditors, they’ll ask who YOU are and that’s standard practice. It’s fine to reveal your name at this point to help you build a rapport with your creditor – after all, you want them to trust you. You can fill account forms etc out and tell them who you are (creditor normally want director details), as this is fine so long as you make sure the account forms don’t have a sneaky liability clause for the director. (I am always assuming that you are a director of a LIMITED company, if you are a sole trader, then you’ll need to be more careful!).
However, after account set up, after the small talk and relationship building, pay very close attention to the paperwork you receive – especially invoices.
If the creditor invoices in YOUR name (even if the invoice also includes your business name), there is a chance that he can issue any proceedings for debt recovery against YOU. The courts of this land will only act upon information put in front of them and if your creditor is a bt crafty, they’ll use the fact that you have been invoices to their benefit.
I speak from experience.
Should the business fail, the last thing you want is to be personally liable for its debt. So pay attention to the small details.
If an invoice arrives with your name on it, refuse it. Do Not Pay it until it is amended to invoice only the company name.
Of course, in the ideal world you hope these things don’t matter (and if your business is doing well, it won’t matter!) but as I am sure you are aware…Business is risky, business is harsh and at the moment business is struggling.
Safeguard yourself at all times.
There is nothing more harrowing than a very scared, upset wife/partner calling you to tell you a bailiff is in attendance at your own home! If this does happen, remember the bailiff is just doing his job and acts according to instructions. He is not wrong, even if the instructions are so work with him (more on bailiffs later!).
The debt isn’t yours but if it’s made it’s way to bailiff stage, it’s very difficult to convince the authorities of this fact. Stay calm and mention that the debt isn’t yours personally. State that it belongs to a company and that as a director you are protected by the company veil (provided you haven’t been involved in fraud, which at this stage isn’t applicable because nobody can check that!). Bailiffs don’t like complication and if you can provide this story, with history of trading as a limited company etc, they normally back down a little and ‘call the office’…in the meantime, call the creditor and ask them to call off the bailiff, stating why the debt isn’t yours personally. If calm conversation isn’t working, just quietly drop in that you’ll appoint your solicitor and if there is an error in the paperwork stating your name as liable instead of the companies, then you will seek costs etc.
This normally works as you are 100% in the right!!