Bad debt advice

printerbase · Apr 28, 2005

Hi,

We have a customer who despite lots of friendly letters, phone calls and statements is still not paying a couple of invoices from 6 months ago. The amount in question is just over £1,000 including VAT and the customer in question is a Limited company.

Does anybody have any advice as to where to go from here in an attempt to get paid ?

Peter

Alpha · Apr 29, 2005

Send one final letter now that says despite our previous reminders you have still not paid the outstanding amounts as shown on our statement and have not informed us of any problems with our invoices. Unfortunately if the outstanding amount is not paid in full by <allow 10 working days from date of letter> we will have no option but to take the matter to the county court.

Send a statement with the letter and ensure that the delivery of the letter is recorded.

Should you need to go to court ensure that you have all relevant documentation on file to show that the debt is valid and that you have taken all possible measures to collect the payment from the debtor.

bwglaw · Apr 29, 2005

With the debt being over £750 you could mention in the 'letter before action' letter that you would seek to recover all costs, statutory interest and file a Winding Up Petition. This would get them shaking.

If you would like assistance please email me direct. I would be able to so a search on this company to check its viability etc.

printerbase said:
Hi,

We have a customer who despite lots of friendly letters, phone calls and statements is still not paying a couple of invoices from 6 months ago. The amount in question is just over £1,000 including VAT and the customer in question is a Limited company.

Does anybody have any advice as to where to go from here in an attempt to get paid ?

Peter

printerbase · May 11, 2005

Hi,

Thanks for the advice everybody, I've sent them a letter giving them a payment deadline or the debt will be passed on to a debt management company, I will now wait and see what happens.

Paul Russell at http://www.businessmanagementsolutionsuk.co.uk/ has also given me some great advice and offered to pursue the matter if the customer fails to pay.

I will let you know how we get on.

Thanks

Peter

Whistle Ink · May 12, 2005

Hi,

Just out of curiosity, those products you sold to them still belong to you don't they until they have paid up? Could you not just take someone round and pick them back up seeing as it's still your property?

If it's a large order - could you not get a deposit?

I hope I never have this problem as I can get quite angry and probably would walk in and pull my cartridges out of their printers and walk out. If someone has a problem paying I would give them some time provided they cared and were sorry - otherwise I want my property back!

I know - Im crazy

bwglaw · May 12, 2005

With respect to any debt management companies out there, sometimes they are not the best solution for the hardened debtor. Many people know that debt management companies or debt collectors are powerless unless they have an Order from the Court, which is unlikely.

You need to take a more legal approach to show how serious you are taking the matter. I have been at both ends and as a lawyer I tend to ignore threats of passing the matter to a debt collection agency or something like them. One of my clients was threatened to pay £2500 and I sent one letter and that wiped the slate clean!

Do consider your options carefully.

BMS · May 13, 2005

(You need to take a more legal approach to show how serious you are taking the matter. I have been at both ends and as a lawyer I tend to ignore threats of passing the matter to a debt collection agency)

As you are a lawyer, I 'am somewhat amazed that you would post a comment like this !

Does this mean that if you are sent a bill that you have no issues with withholding payment as you don't care about being threatened with legal action.

Does this mean that you are potentially a bad risk for anyone doing business with you.

I'm not sure what business you are in but to a lot of businesses bad debt can be a very serious issue. many business fail because of cash flow problems and to suggest that "legal" letters should be ignored is unbelievable.

Maybe you should have mentioned that bailiff's can turn up if a warrant of execution, or the possibility of garnishee orders being placed on companies, all of which can be done through the county court service by non-legal persons.

Let us hope that you do not find youself in the same position of having to chase bad debts..........

kyber · May 13, 2005

BMS said:
Does this mean that if you are sent a bill that you have no issues with withholding payment as you don't care about being threatened with legal action.

That's not what he said. He was refering to debt collectors without a court order having little power and not being a serious challenge. I am sure he was not meaning to imply, and I am surprised you inferred, that he would withhold payment without reasonable cause. Simply handing over a debt to a debt collection agency is not a "legal action."

Stuart

BMS · May 13, 2005

Kyber

I am well aware that handing to a debt collection is not a legal action.....and inevitably with hard core debtors the only sure way of obtaining payment is to take "legal action".

Maybe we need to define two phrases.

"I tend to ignore threats of passing the matter to debt collection agency" seems to imply that this has happened to handsonaccess and by default this implies a scant regard for a good payment profile.

"powerless without an order from the court which is unlikely" well as all county court actions are now relatively simple to obtain including winding up orders / garnishee order / warrant of execution's it seems to me that court orders are relatively simple to obtain !

Should handsonaccess feel that my comments were unfair no doubt he will let me know.

I do however agree that passing the matter to a debt management consulatant is not always necessary and I do agree that I mis-read threats as legal action, for which handsonaccess I apologise.

kyber · May 13, 2005

He can of course speak for himself

I suspect his comment about ignoring threats was an example of oft repeated appropriate (hopefully) advice to clients of his facing unsound demands. Certainly I have experienced many companies trying it on (the poster/booklet scam operators for example).

Going back to the plot, I have had to write off debts in the past simply because persuing them was just not worth the hassle.

Perhaps it is easier these days. Some debtors though seem to get away despite lots of court orders and the like.

Good look to Peter.

Stuart

BMS · May 13, 2005

Kyber

I agree, being pursued for unsound / scam demands would lead me to ignore an threats but with legitimate debts it is a different matter.

And as you say you have had to write of debts which were not worth chasing, maybe if this situation arises again you could try a debt management consultancy such as ours.

bwglaw · May 17, 2005

BMS

You may have misunderstood my meaning and intentions here. I respond to each point in turn:

BMS said:
(You need to take a more legal approach to show how serious you are taking the matter. I have been at both ends and as a lawyer I tend to ignore threats of passing the matter to a debt collection agency)

As you are a lawyer, I 'am somewhat amazed that you would post a comment like this !

Are lawyers not entitled to an opinion? My point here was that as debt collectors do not have powers to collect a debt I would ignore threats from debt collectors (that is not to say that I advise everyone else to do so) If I believe there to be a genuine dispute over payment then I would allow it to proceed to County Court.

Does this mean that if you are sent a bill that you have no issues with withholding payment as you don't care about being threatened with legal action.

Is this a question to me with running my business, or a question on what would I advise clients? If I was advising clients who owe money I would not advise them to ignore any letters but deal with the matter. How I deal with it in my business, is my business and I am entitled to use any legal tactics I see fit as I am aware of any risks far more than a client would be.

Maybe you should have mentioned that bailiff's can turn up if a warrant of execution, or the possibility of garnishee orders being placed on companies, all of which can be done through the county court service by non-legal persons.

I could have mentioned a lot of things here but to avoid complicating the issues I stuck to the current position of the original posting. I gave the original posting author a benefit of the doubt that in practice many people do ignore threats from debt collectors. I also wanted to point out not to waste time and get into the legal arena. I also did not mention this because the Warrant of Execution/Garnishee Orders do not take effect until a claim has been brought against the debtor and judgment has been awarded to the claimant.

I have successfully recovered bad debts and have not had a bad debtor for a long time.

bwglaw · May 17, 2005

BMS said:
"I tend to ignore threats of passing the matter to debt collection agency" seems to imply that this has happened to handsonaccess and by default this implies a scant regard for a good payment profile.

"powerless without an order from the court which is unlikely" well as all county court actions are now relatively simple to obtain including winding up orders / garnishee order / warrant of execution's it seems to me that court orders are relatively simple to obtain !

Should handsonaccess feel that my comments were unfair no doubt he will let me know.

I think I have answered this in my previous posting. The issue of whether it has happened to us is irrelevant. I am a hard-nosed lawyer and how I conduct my business is my own affair. It does not imply in any way that I advise others to conduct their business in the same way. As I said in my earlier posting that I was giving the original posting author the benefit of the doubt if he/she comes across a hardened debtor.

Yes, your comments were unfair and you mixed the two roles I have, as a lawyer, or as the MD. I am of the view that my original posting was and still is correct. I think that BMS thinks I have tread on toes and trying to take his business, which is not my intention, hence saying 'with respect to all debt management companies out there...'

I also speak from experience of working with creditors and debtors. I always advise clients of the other side's position so they can see the risks and be aware of any options open to them.

On a final note, BMS, you said

well as all county court actions are now relatively simple to obtain including winding up orders / garnishee order / warrant of execution's it seems to me that court orders are relatively simple to obtain !"

I have to disagree with you there. The Small Claims Track is not as simple as it should be. Not many people out there are finding the Civil Procedure Rules (CPR) easy to comprehend and many clients are not aware that actually getting the payment (following judgment) is another procedure through enforcement. Many lawyers are not advising their clients of this. I would advise clients to look at any reasonable success in enforcement before issuing a claim, to save the client's expense of throwing good money after bad.

BMS · May 17, 2005

Hi Jonathan

An apology has been posted and as you say even lawyers have the right to an opinion.

As we are not solely a debt management company we did not assume you were trying to "poach" business and even if we were, it is a free market and you have every right to do so.

The point I was trying to make was that if a good payment practise was followed by all then debt managment and legal action would be unecessary.

I have also experience this from both points of view and experience has always told me where to draw the line in regards to paying a supplier. This is not to say that I haven't stretched the cashflow to it's limits but there is a limit to what you get away with before legal action is taken and a threat of court action is usually it.

Unfortunately hardened debtors do not always pay on demand and inevitably, I agree, that legal action is sometimes the last recourse for many companies. as you state even legal action takes time and effort and is sometimes throwing good money after bad.

However sometimes the threat of legal action maybe the prompting action necessary and a third party may be more suitable to carry out this action.

In an effort to put this issue to rest I am more than happy to retract any issues that handsonaccess is unhappy with.

kyber · May 17, 2005

BMS said:
This is not to say that I haven't stretched the cashflow to it's limits but there is a limit to what you get away with before legal action is taken and a threat of court action is usually it.

"seems to imply ... a scant regard for a good payment profile"

Just kidding.

On a related topic though, I vaguely recall that new laws came in regarding payment, especially to small businesses perhaps, within a reasonable number of days (to avoid the big boy tactics of 90+ day payments terms). Is this working generally? (I know that there will always be some akward clients.)

Stuart

Alpha · May 18, 2005

Is this working generally? (I know that there will always be some akward clients.)

Unfortunately Stuart the fact that they are 'big boys' will invariably mean that the smaller company would not pursue interest on overdue debts simply through fear of losing the business.

Smaller firms reliant on smaller customer base cannot afford to take the risk.

simon field · Aug 24, 2011

FWIW From what I've experienced and learned, a "game-playing" debtor knows they have at least 6 months from the commencement of legal proceedings to the point where they can simply pay up the day before court.

It's far too easy for a company who owes money to use that money to fund their own business/improve their cashflow imo.

Assuming that none of us wants to do business with a "client" who takes 6 months plus to pay, what is the answer? Especially when it comes to those end-of-contract-we-don't-need-you-anymore type scenarios.

As a previous poster has said, without a court order a debt collector can just be ignored can they not?

Seems to me that non-payers are rife, and the time and expense of getting your own money back from these kind of people is hardly worth it, as by the time you do get paid your cashflow is destroyed (especially if it's a large amount).

Just my tuppence worth

Simon

Alan R Price · Aug 24, 2011

simon field said:
FWIW From what I've experienced and learned, a "game-playing" debtor knows they have at least 6 months from the commencement of legal proceedings to the point where they can simply pay up the day before court.

It's far too easy for a company who owes money to use that money to fund their own business/improve their cashflow imo.

Assuming that none of us wants to do business with a "client" who takes 6 months plus to pay, what is the answer? Especially when it comes to those end-of-contract-we-don't-need-you-anymore type scenarios.

As a previous poster has said, without a court order a debt collector can just be ignored can they not?

Seems to me that non-payers are rife, and the time and expense of getting your own money back from these kind of people is hardly worth it, as by the time you do get paid your cashflow is destroyed (especially if it's a large amount).

Just my tuppence worth

Simon

A creditor can add interest and charges to a business debt under the late payment legislation even if the contract does not provide for it. In addition, a good tactic against "won't-pays" is to serve a statutory demand: this gives the debtor 21 days to pay, failing which the creditor is entitled to file a bankruptcy or winding up petition at court. This usually flushes out the ones who are playing games.

MikeJ · Aug 24, 2011

Thread's 6 years old.....

Steve Sellers · Aug 24, 2011

bwglaw said:
I have to disagree with you there. The Small Claims Track is not as simple as it should be. Not many people out there are finding the Civil Procedure Rules (CPR) easy to comprehend and many clients are not aware that actually getting the payment (following judgment) is another procedure through enforcement. Many lawyers are not advising their clients of this

Not enough commercial lawyers utilize the stat demand. In my experience it is hugely successful even in the case of companies having an uber amount of creditors. It's often he who shouts the loudest, and a statutory demand does just that.

Bad debt advice

Whistle Ink

BMS

kyber

BMS

kyber

BMS

BMS

kyber

Steve Sellers