Even the best managed businesses can sometimes find themselves in dispute with customers, suppliers, partners or employees.

Resolving disputes can take a lot of time and effort, which could also affect running your business. It is advisable to take steps to avoid disputes completely, or if they do arise, they can be resolved quickly, with minimal cost and impact on business relationships.

Before the mediation session it is a good idea to prepare yourself by understanding what to expect on the day.

This will ensure you maximise the opportunity of reaching an agreement. Your case manager can also help you to prepare.

Prepare for your mediation

• It’s important to attend the session in person; mediation is about speaking face-to-face. Your legal or other professional adviser can attend with you.
• Attending mediation is voluntary and it does not mean that you have to agree to resolve your dispute. However, you are expected to listen to the views of the other party with an open mind, be cooperative and be ready to consider resolution options that may require a degree of compromise.
• Make sure you are familiar with exactly what’s in dispute. It’s a good idea to prepare a short statement to present at the mediation that outlines the key issues in dispute and why they are important to you.
• Think about the outcomes you would like to achieve. Think about other alternatives or options you would be prepared to consider.
• Consider what the other party might want from the mediation. Think about what you can agree upon.
• Know your bottom line; consider whether you are prepared to compromise to reach an agreement and what you can realistically afford or accept.
• Understand the strengths and weaknesses of your case. Disputes are rarely black or white so you will need to be objective about your claims. You may decide to take legal advice before the mediation to fully understand what can be realistically achieved under the circumstances.
• Be prepared to make decisions during the mediation session.
• You may want to consider having a support person to accompany you, or to be available by telephone. This could be a legal or other professional adviser. Make sure that they are familiar with your case and that you can afford their fees to attend.
• Bring all supporting documentation with you, in addition to any information you intend to discuss at the mediation. Being prepared is vital to achieve a full and constructive discussion.
• If you require a translator to assist you during the mediation session, you must advise your case manager so they can arrange for this service. A translator will be provided at no cost to you.
• Don’t feel rushed. Arrive 15 minutes before your session is due to begin. Most mediations take at least four to six hours and we recommend you plan for a full day. In some cases, mediation may take even longer.

What to expect from your mediation session

Mediations are confidential and you will be able to speak openly, allowing an honest and frank discussion. The mediator will encourage you to understand each other’s perspective.

While many mediation sessions follow more or less a standard format, this can change depending on the mediator and the needs of the disputing parties, so be prepared to be flexible.

Typically the format includes:

• Introductions – For mediations held at our offices please notify the SBDC reception desk on Level 2 of your arrival. When all the parties have arrived you will be taken to the mediation room. An introduction and explanation of the mediation process is provided by the mediator, including confidentiality requirements. All the parties will be asked to sign an SBDC agreement to mediate.
• Presentations – While mediators may differ in their approach, they will usually ask each party to present their case and describe the issues in their own words and without interruption. The mediator will already have read background information to the dispute provided by the case manager.
• Discussion – The mediator may ask the parties to agree on an agenda by identifying and clarifying the issues to be discussed. You will be guided by the mediator in exploring the issues and discussing any information shared by the parties.
• Generation of options – The mediator will help the parties to discuss the issue, so that they reach their own options to resolve the dispute. The mediator will also assist the parties to decide whether the options are workable and durable.
• Private sessions – The mediator may decide to have confidential private sessions with either party at any time during the mediation. It is important to remember that while the mediator can help the parties to think about their options, they cannot provide legal advice. Nor can they make decisions, these must be made by the parties themselves. Anything discussed with the mediator during private sessions is confidential.

If you reach agreement at mediation

If an agreement is reached, a mediation outcomes document is drafted and signed by all parties. This is the end of the mediation process. The parties are expected to comply with the terms of the agreement. It is important to understand that the signed mediation outcomes agreement is a legally binding document and can be enforced in the courts.

If you cannot reach agreement at mediation

If an agreement is not reached, the parties can continue to negotiate or consider other legal avenues to resolve the dispute. You may apply to an appropriate court or tribunal for a formal determination to be made. Your case manager will discuss options with you.

If the dispute is related to a retail shop lease, either party may refer the matter the State Administrative Tribunal (SAT). You will need to obtain a certificate from the Small Business Commissioner (available upon request from your case manager) and include this with your SAT application.

Providing feedback

After attending mediation, you may be surveyed on behalf of the State Government, which heavily subsidises our mediation service. We also conduct quarterly surveys on all of our services, including mediation. This information is essential in helping us to improve our services and your participation would be appreciated.

If you need further assistance contact your dispute resolution service case manager on 133 140.

Mediation is a structured negotiation process where the parties in a dispute voluntarily meet to discuss their dispute with the help of an independent and accredited mediator.

During mediation parties are encouraged to identify and explore options to resolve their dispute. The mediator cannot make a decision regarding the outcome and supports the parties to reach their own agreement.

Who can access mediation?

The Small Business Commissioner oversees the mediation service in Western Australia. This service aims to resolve business to business, commercial farm debt, retail shop lease, and business to government disputes involving at least one small business. The dispute must involve a property or business located (or service delivered) within Western Australia.

How long is each session?

Each session usually runs for four to six hours however, we generally request that parties set aside a full day for mediation, in case their matter takes longer to resolve.

In most cases, one session is sufficient to reach an agreement, but more can be arranged if required.

Costs

The cost of mediation is $125 per party per session. This is subsidised, with the majority of the cost being covered by the State Government.

If a mediation session is cancelled within 48 hours of the appointed time, a cancellation fee of $1000 (the full cost of mediation) will apply to the party that cancelled and their $125 mediation fee will not be refunded.

Benefits

The benefits of mediation include:

• the issues in dispute can be clarified
• the parties in dispute are in control of the outcome and negotiate their own agreement with the assistance of a mediator
• it is flexible and parties can tailor solutions in consideration of their needs and interests
• it is inexpensive and efficient compared with taking the matter to court
• the approach is informal but structured
• it improves the likelihood of the business relationship continuing between the parties after the dispute is over
• discussions are confidential and cannot be used by the parties in any legal proceedings
• an agreement from mediation is legally binding and can be enforced

Location of mediation sessions

In the Perth metropolitan area, mediations are generally held at our premises at Level 2, 140 William Street, Perth.

In regional areas, mediations can be arranged in a location that suits both parties.

Applying for mediation

Your SBDC case manager will advise if mediation is the next step to take. If it is, you will be provided with an application form and mediation reference number. Your case manager will assist you with preparations for the mediation.

Preparing for the mediation session

If you are attending a mediation session via our dispute resolution service, read these tips to help you prepare.

Every small business has to deal with contracts; most business relationships will involve some sort of contractual commitment or obligation.

Ensuring contracts are put in writing and that each party understands their obligations can help you avoid disputes. If you are using contracts, making sure a dispute resolution process and a way for handling complaints are included, will make it easier to resolve problems if they arise.

Before entering a contract you are recommended to always seek independent legal advice.

If you are in a contractual dispute it is advisable to:

• check your contract to be clear on your facts
• discuss the issue with the other party or parties
• note any discussions or agreements in writing
• write a letter to the other party
• if you cannot reach agreement, contact us for further assistance, including access to our dispute resolution service
• seek legal advice. 

Our free dispute resolution service can (DRS) help you resolve disputes involving other businesses or Government departments. The types of disputes we can help with are listed below. Watch this short video for a quick overview of DRS.

Leasing business premises

If disputes between tenants and landlords arise it’s important they are resolved as cost-effectively, and with as little damage to the relationship, as possible.

The first step is to read the lease and other associated documents to understand your rights and obligations. In many cases, a well-written lease will make it clear what both parties have agreed.

If the lease or other documents do not clarify the issue contact one of our commercial leasing advisers for guidance or seek independent legal advice.

Retail shop lease disputes

If your dispute relates to a retail shop lease you can contact us for help to resolve the matter. Our case managers will assist both parties to clarify or resolve the issues through negotiation and mediation. In relation to most retail leasing disputes you will need to first attempt to resolve the issue through our dispute resolution service, before you can make an application to the State Administration Tribunal (SAT).

Non-payment or non-performance of goods and services

Under Australian Consumer Law (ACL) your business is considered to be a ‘consumer’ when you purchase goods and services that are:

• valued at less than $100,000
• valued at more than $100,000 and are normally bought for personal, domestic or household use
• commercial vehicles or trailers used mainly to transport goods on public roads

In these instances you may be entitled to a range of remedies under the ACL consumer guarantees provisions if something goes wrong. If a dispute arises in relation to goods or services provided in the course of your business our dispute resolution service may be able to help.

If your business supplies goods and services to customers you must provide consumer guarantees as set out in Australian Consumer Law.

Non-payment in the construction industry

In Western Australia, there is legislation that provides a rapid adjudication process to resolve building and construction sector payment disputes.

For contracts entered into from 1 August 2022, the Building and Construction Industry (Security of Payment) Act 2021 will apply.

The Construction Contracts Act 2004 applies to contracts entered into prior to 1 August 2022.

These Acts allow for the appointment of an adjudicator (a registered, trained professional who is experienced in construction contract administration and dispute resolution) and sets a strict time limit on the process so decisions can be made quickly and payment is not held up.

Adjudication claims must be made within 90 business days of the payment dispute arising; this could include the amount being in dispute, payment not being made on time or not paid in full.

The Department of Energy, Mines, Industry Regulation and Safety website has more information on payment disputes in the construction industry:

• Information for disputes over contracts entered into prior to 1 August 2022 (falling under the Construction Contracts Act 2004)
•  Information for disputes over contracts entered into from 1 August 2022 onwards (falling under the Building and Construction Industry Security of Payment) Act 2021.

Disputes with government departments or agencies

Sometimes a dispute may arise between a business and a government department or agency. Our dispute resolution service may be able to help by contacting the relevant government body with a view to clarifying the issue and resolving the dispute.

Franchises

Most franchise agreements will include an obligation for both parties to attempt to resolve issues through a process of dispute resolution, including mediation. Parties covered by a franchise agreement also have rights and obligations under the Franchising Code of Conduct to consider. The Australian Competition and Consumer Commission (ACCC) administers and enforces the Code and can be contacted for further information.

Using a letter of demand is an important formal first step to take to recover money owed to you.

You can write a letter yourself without the aid of a lawyer to save money.

Before sending a letter of demand, check your contract or agreement with the person or company who owes you money. It is important your letter of demand is sent to the correct person or company. Make sure your demand is in line with your agreed terms and conditions.

You may also wish to consider if you need legal advice before sending a letter of demand.

Advantages of sending a letter of demand

• Provides the debtor with a clear demand for payment.
• It gives the debtor one more chance to pay before you take further action.
• It can help maintain goodwill and a positive working relationship to avoid potentially hostile and expensive legal proceedings.
• It could provide useful written evidence if you need to take the matter further (send it by registered post or courier to ensure you have proof of delivery).

What to include in a letter of demand

If you decide to write your own letter of demand, it should:

• Clearly explain the issue.
• Firmly request the other party pay within a specific time period (that is stated in the letter).
• Detail your preferred payment method.
• Supply copies of any previous requests for payment and documents that support your claim for the payment due.
• Keep a copy of the letter and any other documents sent to the other party for your own records.

Other useful tips

• Make sure you attach copies of any relevant contracts, agreements, invoices and any other evidence that you supplied the goods or services as promised. Be aware that a letter of demand can only be used for debts related to goods or services provided; it cannot be used in relation to loss or damage.
• The letter of demand should not look like a legal document, nor should it imply that you have started any legal proceedings.
• Clearly state the deadline by which you expect to be paid. As a guide, give the debtor at least 14 days to pay.
• If the debt is still outstanding at the end of this period contact us for further help.
• If you receive a letter of demand, don’t ignore it. If you disagree with the amount owed write back to the person who sent it asking for clarification. If you don’t believe you should pay any of the claim contact our business advisory service for help.

The advice and resources on this page are general in nature and do not constitute legal advice. For legal advice specific to your particular facts and circumstances, please contact a lawyer. Refer to our disclaimer for further information.

Often the most costly part of resolving a dispute is the time spent dealing with it instead of running your business.

Your dispute may be with a customer, supplier, business partner or employee. In each case how you manage the dispute may vary, however there are some key steps you can follow to handle the issue and retain good business relationships.

Methods of dispute resolution

Our dispute resolution service offers ways of resolving disputes without going to court. These include negotiation or guided resolution and  mediation.

Guided resolution or negotiation

Guided resolution is a process of negotiation that involves an independent third party who works with both parties to clarify the disputed issues, understand their rights and obligations, and identify possible options to resolve the matter.

Mediation

A voluntary, structured settlement procedure. A mediator is appointed to assist both parties to reach an amicable solution to their dispute. The mediator is not the decision maker and assists the disputing parties to decide on the outcome.

As a first step, subcontractors in the construction industry are advised to check their contract for a dispute resolution clause. If there is one, the stated processes must be followed otherwise you could be technically breaching the contract.

Our dispute resolution service uses intensive case management (a form of guided resolution/negotiation) to help parties resolve their disputes. We can also provide parties with access to our subsidised mediation service. Find out more about the types of disputes we can assist with.

Go to court as a last resort

Taking a disputed matter to court can be an expensive and time-intensive process. You will need to consider the time, money and effort involved (as well as the indirect costs to your business) to make sure it is worth it. Before threatening legal action, get advice from a lawyer and consider all of your options.

Not being paid for the goods and services you have supplied will impact on the cash flow and profitability of your business.

Establishing a process to deal with non-payment and recover debt is critical. It is also important that the process allows you to maintain a good relationship with your customers.

Consider the following options.

Get in touch with your customer 

Contact them as soon as their invoice is overdue to determine whether they have a valid reason for not paying. Try to negotiate a revised deadline for them to pay.

Send an overdue payment reminder

If you have not received payment within the timeframe outlined in your payment terms and conditions, or what has been agreed between the two parties, you can choose to send an overdue email to formally request payment.

You can create your own reminder or download and modify our sample overdue payment reminder email.

Send a letter of demand

If you still don’t receive payment, consider sending a letter of demand outlining the amount overdue, the deadline by which you expect payment and the action you will take if they fail to pay on time. Keep a copy of the letter and send it by registered post, to provide evidence if you need to make a claim in court. You can create your own letter of demand or download and modify our sample letter.

Seek assistance

If your customer is another business or a government department, and they have not paid because of a dispute about the performance or supply of goods and services, you may consider using our dispute resolution service. This service provides a range of options to settle a dispute without going to court.

Hire a debt collector

A debt collector will act on your behalf to pursue a debt from your customer. They will charge a fee or a percentage of the total amount collected. In Western Australia, debt collectors must be licensed through the Department of Energy, Mines, Industry Regulation and Safety. Search for the debt collectors at the Institute of Mercantile Agents.

Start legal proceedings

You may need to take legal action if the debt remains unpaid. Some proceedings can be complex and expensive so first consider the:

• likelihood of recovering the debt
• time away from your business in pursuing the debt
• associated legal and court costs

In Western Australia, the type of court to deal with disputes is based on the value of the debt.

• Magistrates Court handles minor claims (debt or damages up to $10,000) and general claims (debt or damages up to $75,000)
• District Court handles debt or damages up to $750,000
• Supreme Court handles debt over $750,000

Read our guide on Recovering a debt through the Magistrates Court for more information

Most government assistance for small business is in the form of free or low-cost advisory services, information or guidance.

You may be eligible for a government grant in certain circumstances, such as research and development, capability building for specific events, innovation or exporting. Each grant will have eligibility criteria you need to meet in order to apply. In some situations, these grants may be offered on a matched funding basis.

Where to find government grant opportunities

You can search a full database of federal, state and local government grants using the Business.gov.au online grant finder, or for federal government grants only visit the GrantConnect website. Both are a free service.

Read our frequently asked questions about government grants to find out more about the grants available to start or run a business.

How to apply for government grants

Many government grants are assessed on a competitive basis, so it’s important to not only meet the eligibility criteria but also demonstrate the outcomes and benefits the funding will provide. (This could include job creation, a reduction in landfill, or a percentage of revenue growth for your business.)

Read our expert’s guide to grant funding for an overview of the grants application process, including insights into the information and documentation you’ll need to provide.

Support grants administered by the SBDC

The SBDC is administering grants for the following:

• Small Business Electricity Credit

Most of your business income is assessable; this means you must declare it and it is subject to tax.

Tax deductions

Tax deductions reduce your income; they are taken off your total assessable income and you pay your tax on the left over income. You are not reimbursed for your tax deductions.

You can claim tax deductions for expenses incurred in running your business, providing they are not private or domestic expenses, such as childcare fees. Entertainment, fines and some other expenses are also excluded.

Common business expenses that may be claimed include:

• advertising and phone costs
• business travel
• fringe benefit tax
• motor vehicle costs
• depreciation of assets such as plant and equipment
• salary, wages and superannuation contributions
• repair and maintenance costs
• costs associated with running your business from home.

The ATO has more information regarding income and deductions for business.

Tax concessions

Generally, to qualify for small business tax concessions your business must have an annual turnover of less than $2 million.

You can choose the concessions that suit your business providing you satisfy any associated conditions. You will need to check each year to determine whether you still qualify for these concessions.

The ATO has more information regarding tax concessions for small business.

Payroll reporting

If your business employs staff, payments such as salaries, wages, pay as you go (PAYG) withholding and superannuation need to be reported to the Australian Taxation Office (ATO) via Single Touch Payroll (STP).

STP reporting take places as these payments happen via your preferred online payroll solution and helps reduces your reporting requirements at the end of the financial year.

Visit the ATO website to find out more about STP reporting requirements.

Monthly or quarterly business activity and instalment activity statements

The Australian Tax Office (ATO) requires businesses to submit a business activity statement (BAS) monthly, quarterly or annually (annual GST return, if eligible).

It is used to report and pay goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding tax and other tax obligations.

When you register for an Australian business number (ABN) and GST, the ATO will automatically send you a BAS when it is time to lodge. All businesses registered for GST must lodge a BAS before the due date.

An instalment activity statement (IAS) is similar to the BAS but without GST and some other taxes. Businesses that are not registered for GST would submit an IAS to pay PAYG instalments.

Financial year reporting

In Australia, the financial year for tax purposes runs from 1 July to 30 June.

Businesses are required to lodge an income tax return for this period. If you operate your business as a sole trader you can declare your business income as part of your personal income tax return.

Record keeping

As a business owner you are legally required to keep records for a period of at least five years after they are prepared, obtained or the transactions completed (whichever occurs last). Keeping good records of your transactions and tax invoices will help you to monitor the financial performance of your business as well as comply with your tax obligations.

Records must be in English and in a format accessible to the Australian Tax Office (ATO). You can incur penalties if you do not keep the right tax records.

Your obligations to keep records continue even after you sell or close your business.

The ATO has developed a record keeping evaluation tool to help you find out what records you need to keep for your business.

Business records you need to keep

Income tax records including:

• income and sales – sales invoices, receipts, cash register tapes and cash sales
• purchase and expense – tax invoices, cheque book records, and receipts
• year-end records – list of debtors and creditors, stocktake sheets and depreciation schedules
• bank records – bank statements and loan records
• goods and services (GST) – tax invoices from suppliers.

We recommend downloading the booklet on How to set out tax invoices and invoices from the Australian Tax Office (ATO).

Staff or employee records including:

• tax file number (TFN) and withholding declarations
• records of wages, allowances and other payments
• superannuation records
• fringe benefit tax (FBT) details.

The ATO has a record keeping evaluation tool detailing the exact records you need to keep.

Tax assistance for business owners

The ATO offers a range of free services including workshops and webinars to help you understand and comply with your tax obligations.

You can register for these services online or by phoning the ATO on 13 28 66 (during office hours).

You can also get a registered tax or BAS agent to help you. Registered agents are qualified and experienced with tax and can legally charge you a fee.

More information

Visit the ATO website to find out more about:

• How to complete a business activity statement.
• How to lodge your business activity statement.
• Due dates for lodgement and payment of activity.
• The in-house facilitation service for businesses with a tax or super dispute.

You can also do free short courses in record keeping and more in the ATO's online learning platform essentials to strengthen your small business.