Contingent liabilities encompass the loss and costs that businesses predict, though not accurately since they are dependent on future outcomes. Unfortunately, contingent liabilities cannot be avoided entirely. Operating businesses have events that they did not see coming, whether big or small. Weather, disgruntled employees, supply chain changes, and product damages can all play a part in causing loss and extra costs.
If you have questions about contingent liability and how it may impact your business, contact an M&A attorney in Miami.
To prevent contingent liability, avoid receiving payment for both goods and services on lines of credit or the mere word of a client or customer. Payment should always be taken upfront when possible. This is especially crucial for instances in which the work has already been performed. Take payments in full versus in installments. Avoiding payments made in installments helps mitigate any future problems that may arise, as well as it gives you the assurance of payment.
Include records of contingent liabilities in accounting records. You may not be able to predict the exact dollar amount, but planning for pending debt can help prepare your entire company for any loss.
You may consider getting contingent liability insurance to protect the company from loss. If you wish to proceed, contact a corporate law firm in Miami to ensure you also understand your legal rights. Contingent liability can make for complicated scenarios, and consulting with a qualified attorney can help you avoid any further financial loss, or if the situation escalates, can help you with filing a lawsuit.