Login to MyACC
ACC Members

Not a Member?

The Association of Corporate Counsel (ACC) is the world's largest organization serving the professional and business interests of attorneys who practice in the legal departments of corporations, associations, nonprofits and other private-sector organizations around the globe.

Join ACC

Are you ready?

The Australian economy is experiencing challenging times, considering the upward trend of interest rates, tight labour market, cost of goods rising and recent floods affecting agricultural supplies of numerous products. It is critical for General Counsel and in-house legal teams to be equipped to navigate such challenges and be able to assist their respective businesses with commercial and practical advice to ensure any adverse impact of the current economic conditions, is minimised.

In this article we explore 9 practical things that your business should prioritise in order to weather the current financial turbulence.

  1. Look after your staff. For now, unemployment remains low and the labour market is tight. Any recession is likely to impact heavily (and first) on households. Your talent is likely to have many good ideas about shock-proofing your business. At the very least, you should be managing expectations and providing as much certainty as possible.
  2. Reach out to your customers. Maintaining strong relationships and loyalty in customers helps ensure a reliable cash flow. Customers are still seeking comfort about the integrity of their supply chain, so be clear about what your business can offer at this time, and what your payment terms will be.
  3. Make sure your paperwork with your customers is current. Now is the time to make sure you have “doted the i’s and crossed the t’s”. Do you have signed contracts? Did you receive the guarantees you were promised? If you are supplying goods on credit, do you have an enforceable security agreement for those goods, has the customer completed a credit application and have you registered a financing statement on the PPSR?
  4. Maintain good relationships with your key creditors. No one likes unpleasant surprises, particularly lenders, and full and frank discussions as early as possible will leave more options on the table. In our experience, most creditors want to work with their debtors to find an outcome that works for both parties. We suggest you keep a careful eye on the covenants in your bank facility documentation and make sure you comply with those covenants – or seek a waiver if there are any issues.
  5. Consider options for reducing debt, particularly before further interest rate hikes. If debt is getting out of control, take prompt action and talk to your advisors about your options.
  6. Reduce costs where possible. Maintain an accurate financial position for your business, prepare and monitor cash flow forecasts carefully, and check underlying assumptions to ensure that they are realistic.
  7. Do your due diligence on counter-parties. You want trading partners who have a good track record and financial resilience. Ask for financial information and gain an understanding of how well-placed your suppliers are to continue to do business in tough times.
  8. Seek trusted professional advice early to identify the best options for your business if it experiences financial distress. Make the most of the insights on offer from your lawyers and accountants. Stay in touch with relevant industry groups.
  9. Keep directors’ duties front of mind. Directors must act in good faith and in the best interests of the company. A director should not commit a company to new obligations unless he or she believes, on reasonable grounds, that the company will be able to perform those obligations when it is required to do so. Further, directors should avoid taking illegitimate or unreasonable business risks.

Being aware and ahead of risks before they impact your business is critical.  Dentons’ national Insolvency and Restructuring team provides timely and considered analysis of legal and commercial issues to facilitate the adoption of strategies that deliver successful outcomes.  

To access tools and resources that could assist your organisation, visit our Downturn Response Hub or contact:
Melbourne, Kon Tsiakis, 03 9194 8360
Sydney, Justin Bates, 02 9931 4763
Brisbane, Claire Petersen, 07 3074 1165
Adelaide, Wendy Jones, 08 8233 0645
Perth, Brian Smith, 08 93230965 

ACC Aus VIC IHCD 23 banner

Join Kon Tsiakis, Partner, Dentons, at the 2023 VIC In-House Counsel Day on March 9, facilitating the Chief Legal Officer Roundtable on the topic 'Preparing for a Recession'.

Register Now



This site uses cookies to store information on your computer. Some are essential to make our site work properly; others help us improve the user experience.

By using the site, you consent to the placement of these cookies. For more information, read our cookies policy and our privacy policy.