Business Legal Advice, Cash Flow; Now is not the time for handshake deals

So handshakes are banned. Handshake deals aren't a good idea at the moment either. We asked Lawyer Bruce Pasetti for his thoughts on debt agreements, getting paid and contract interruption.
Handshake image with a banned symbol overlaid
  • Handshake deals are easy to do, so why shouldn’t you rely on them?
  • Dealing with creditors? Have a realistic plan you are committed to.
  • Can’t fulfil your contracts? What are some options?
  • The right advice can help you get what’s owed to you.

Not shaking hands is a great way to help protect yourself from Coronavirus/COVID-19. It’s equally important to protect your business from ‘handshake deals’ when tackling the tough times associated with the pandemic.

We caught up with’s Bruce Pasetti to go through some key questions we have received from business owners across Australia in the last week.

I am having trouble with cashflow what do you suggest I think about when managing supplier payments and terms?

Bruce says, as a business owner himself, you need to ‘take a breath’, or clear your head, and think about what to do. “First things first, clearly understand your finances and work out where the problems lie.”

“Then you must put together a cash flow projection and work out what you can realistically afford to pay and when you can afford to make payments. That way, you can have a plan ready to take to your creditors, and they can see that you are serious about the plan and about making payments to meet your debts.”

“More than anything creditors want you to ‘make good on your debts’ (pay them), it is easier for them than having to recover the debt through an agency or the courts, but they are not likely to accept any changes to the previously agreed trade terms unless you have a clear plan in place.”

“If you can agree on a payment plan or changed terms, you must get them confirmed in writing. A handshake or verbal agreement is not good enough in such circumstances, you have changed the term of trade with a creditor, so it must be written down,” says Bruce.

“A handshake or verbal deal may not be remembered the same way but both parties if there is a dispute or one of the businesses goes into liquidation!”

What practical advice do you have for managing leases, rents, finance and other recurring bills?

Bruce believes that it is a similar challenge to the first question, “As a business owner you must work out what you can afford, put together a plan and be proactive with your creditor. The longer you leave the issue, the worse it will become. So early action is key.”

“If we think about rents for the moment; there is not going to be a lot of competition in the market for office or retail space. So, it makes no sense for a landlord to be inflexible – they will simply end up with vacancies in a market where nobody is signing leases.”

“What you can negotiate will be depending on the goodwill that you have with the people and businesses you owe money to. For example, if you are already behind on your rent, the conversation will be far more complicated than if you are up to date and a model tenant.”

“Be realistic, show a genuine commitment and demonstrate your willingness to pay, and as stated earlier, get any changes to your agreements in writing. The old saying about a verbal contract not being worth the paper it is written on is absolutely true,” says Bruce.

How do I put on a PPSR, why, and why would I pay someone to do it?

“Ok, so the PPSR is a scheme where you can register a retained interest in goods that you are supplying to a client.  This means that if your customer doesn’t pay, or goes broke, you are in the best position to get your goods, or their value, back – effectively you are placed within the list of creditors that an administrator would look to payout.”

“There is an online registry for business owners, and while the online forms are great, they are not the easiest to complete or understand. It is possible to tie yourself in knots with legal mumbo jumbo, think you’ve done the right thing and unintentionally stuffed it up. “

“My recommendation would be to consult a professional who can help you to complete any registrations in the right way. By doing so, if the worst happens to a debtor’s business, then you have the best chance of getting back some of what you are owed or your goods returned to you,” says Bruce.

What are my options if I have supply issues and I am struggling to meet my commitments under contract?

Business owners do have options available to them says Bruce, but it all starts with communication. “In business, the vast majority of us try to be fair and reasonable, and we hope that those values are returned when we are in trouble. If you think this is the case with your business and your clients, then a conversation with written follow-up agreeing new terms of trade can be enough to take the pressure off.”

 “However, that is not always the case, so I would advise any business owner in this situation to get specialist legal help.

“As has been referenced in other blogs, ‘Force Majeure and Frustrated Contracts’, ‘Safe Harbour’ are terms being commonly used and are complex legal frameworks that business owners should not attempt navigate on their own.”

“It is possible to negotiate variations, to protect your business and your assets, and to come out the other side, but you need a plan to do so. And now is not the time to try and be a legal or contracts expert, unless you are a professional in that area.

“If you are having trouble meeting your contractual obligations, consult a professional as soon as possible. They will be able to review your contracts, identify and understand clauses and terms and then be ready to take action as required to support your business,” says Bruce.

Where to turn to for the right advice

The ATO is running a comprehensive business and personal tax related Covid-19 page.

The Institute of Public. Accountants has a good page with links for Small business and their advisers.

The Fairwork Ombudsman web page has guidelines if you are going to have let people go.

If your business needs professional advice to get you through the next few months, has a panel of experts like Bruce, with decades of experience in helping companies to meet challenges, build robust strategies and go on to future success. Contact us to learn more.

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Any or all of these reasons for business owners with a Pty Ltd company who:

  • have closed or are likely to close their business without any money left 
  • cannot afford $15,000 but want to place their company into liquidation  
  • want to do the right thing and inform their creditors properly about the business closing down 
  • want to draw a line in the sand so they can get on with their future.

If you have personal assets you want to protect, like a family home or director’s guarantees, this may not be for you, but you should ask us.

Cheryl Stainsby

Cheryl is a Director’s Advocate specialising in Crisis Management; Business Health Checks, Asset Protection and Exit Strategy  Find out more or Email Cheryl.

Niall Coburn

Niall Coburn

Niall is a Litigator, Prosecutor and Corporate Investigator. Find out more or Email Niall.

Bruce Pasetti portrait photo

Bruce Pasetti

Bruce Pasetti is the ‘go-to’ for actions for Windup (or to defend companies and directors against similar actions). Bruce is a Solicitor with over 20 years legal and specialist Insolvency experience. Find our more or Email Bruce.

Stuart Craig

Stuart is a Business Transformation Specialist and Certified Practicing Accountant, specialising in business turnaround and restructure, business management and business ownership transfer. Find out more or Email Stuart.

James Flaherty

James Flaherty

James is a business consultant and accountant. He specialises in sales and marketing for the business and finance sectors. Find out more or Email James.


Ginette Muller

Ginette is a Business Crisis Advisor and Accountant specialising in Safe Harbour, refinancing, litigation funding, restructure and business crisis advice. Find out more or  Email Ginette.