Managing disputes and protecting your cash flow

Disputes are an unfortunate but common part of running a business. Late payment, disagreements over contract terms or a breakdown in a trading relationship can be commonplace and can often trigger conflict. How, and how quickly you respond, can make a significant difference to cost, cash flow and business continuity.

Spring is often a time for businesses to take stock, but it’s also a useful moment to reflect on matters which threaten your cash flow and your ability to run your business successfully.

When a dispute arises: why the first steps matter

When a dispute arises, the early decisions you make can often shape the entire trajectory. Emotions can understandably run high, particularly where long‑standing relationships or significant sums of money are involved, but delay or inaction often weakens your position.

Disputes can escalate because one party fails to respond decisively, positions become entrenched and/or communication breaks down. Acting promptly can help you to:

• maintain control of the narrative 

• protect cash flow 

• reduce the risk of reputational damage 

• limit management time being diverted from the business. 

Early legal input can help you understand where you stand, what leverage you have and what outcome is realistically achievable.

Understanding the real scope of the dispute

Commercial disputes are rarely limited to a single issue. A disagreement about payment, for example, may also involve questions around incorporation of terms and conditions, contract performance, and/or termination rights. 

One of the first steps is therefore to identify the scope of the dispute. 

• What contractual terms apply? 

• Are there deadlines, notice provisions or dispute resolution clauses that must be followed? 

• Are there wider regulatory or commercial implications? 

Clarifying the scope at the outset reduces the risk of missed opportunities and can prevent issues drifting or multiplying unnecessarily.

Protecting your position once a dispute has started

When a dispute is live, or even contemplated, what you say and do matters. Additionally, documentation and conduct matter. Practical steps often include: 

• preserving key documents and correspondence 

• ensuring communications are consistent and measured 

• avoiding informal admissions or actions that could be relied on later. 

Where cash flow is at risk, swift action can be crucial. In debt recovery cases, allowing arrears to drift can significantly reduce recovery prospects. A clear escalation strategy, backed by legal remedies where appropriate, often produces far better outcomes than prolonged and/or informal chasing.

Choosing the right resolution route

Not every dispute needs to end in court. In fact, many are resolved more efficiently through alternative dispute resolution (ADR) such as negotiations or mediations. 

ADR options can: 

• reduce legal spend 

• resolve matters more quickly 

• preserve valuable commercial relationships. 

However, where the other party is entrenched, evasive or acting unreasonably, litigation may be unavoidable. In those cases, having clear strategic oversight from the outset can help ensure the dispute is progressed proportionately and with a clear objective in mind.

Managing disruption to the business

Disputes absorb time and attention, particularly for senior management. A key role of a legal adviser is to shoulder the procedural burden; often lawyers will assist with correspondence, deadlines, evidence and strategy so that the management can remain focused on running the business.

This is especially important for disputes involving ongoing trading relationships or key customers or suppliers, where mishandling the process can have wider operational consequences.

Learning from the dispute without losing momentum

Once a dispute is resolved, attention often turns to moving on. However, the post‑dispute phase is also an opportunity to strengthen future resilience. 

Practical improvements may include: 

• clarifying contractual terms that caused uncertainty 

• refining escalation or credit control processes 

• improving internal decision‑making processes. 

Importantly, these steps are best taken after the dispute has been dealt with properly, without weakening your position while it is still live.

How Debenhams Ottaway can support you

Our commercial litigation team work with businesses from the moment a dispute arises, providing clear, pragmatic advice on rights, risks and strategy from day one.

We focus on resolving disputes efficiently, protecting cash flow and achieving commercially sensible results, whether through ADR or litigation. In debt recovery matters, we act as an extension of your credit control function, helping you recover sums due while maintaining appropriate pressure and control.

If you are dealing with a live dispute, struggling with non‑payment or unsure how best to proceed, our team is here to help you take the next step with confidence.