Business debt

[vinnie14]

Hi,

Need some advice if possible please.

Im a sole trader, I started trading with a supplier 12 months ago, when I opened my account it was set up with a 5k credit limit, which I never asked to be increased. I'm a very busy tradesman and get a lot of work, sometimes it can be a nightmare keeping on top of everything. Yesterday I received a solicitors letter demanding payment for 31k, the creditor has included materials I have never even had in this and some goods have been returned but has not factored that into what I owe him.
Surely he should never of allowed the credit limit to be over taken and also by such a large amount? I'm not the only one he's allowed this to happen to.

The solicitor has demanded I pay the full amount by 15th or a court claim be issued. Or a payment schedule be agreed. What rights do I have and what sort of payments do I have the right to pay or is it purely down to him??

But I don't agree with the balance so where do I stand with that?? He obviously hasn't informed his solicitor of this!

I know someone else who recently got into problems with a creditor who agreed for him to pay £50 a month. W

 

[OldWelshGuy]

There are two elements here.
1. if you have something you have to pay for it, regardless of your agreed credit limit.

2. if you have NOT had something you don't pay for it.

The first thing to do is to write back and state that you are querying the amount being asked as you believe it is incorrect. Tell them you need 28 days to do this as there are a lot of items of paperwork to be audited.

Once you have done this, you need to agree what is woed, then you are going to have to pay it. As you are a sole trader you personally owe the oney (as I am sure you know). Then you have to come to an arrangement.

Ok I feel this has to be said. you have run up a debt of £31k in 12 months, with the greatest of respect, there is no way on gods earth could you not have known you had gone over the £5k limit as this is £750 a week in purchases. Time to be completely honest here, possibly with yourself .

 

[Moneyman]

ditto....that sounds like a serious case of head in sand and bad book keeping. Your credit limit is meaningless legally.

 

[internetspaceships]

The way I'm reading this you're blaming the supplier for your own bad financial management?

Please tell me I'm reading that wrong Vinnie.

 

[vinnie14]

Not at all.
I'm owed 15k from bad payers. I'd say 10k of it is from materials ive never taken and some of the remainder i am waiting for payments from clients for. 60+ day payers.
Do I have the right to ask for 28 days to sift through paperwork?

Because I am responsible for the debt, even the 15 k I haven't been paid what sort of payment terms am I legally allowed to offer and adhere too??

 

[internetspaceships]

You're responsible for the bills regardless of whether you have been paid or not. Within the terms set by your supplier, not ones you make up yourself to fit your circumstances.

 

[OldWelshGuy]

Not at all.
I'm owed 15k from bad payers.
not at all relevant to your debt sorry.

I'd say 10k of it is from materials ive never taken
See my point 2. above, if you never had it, you are not liable for it.


and some of the remainder i am waiting for payments from clients for. 60+ day payers.
not at all relevant to your debt sorry, this is what cash flow is all about, Most businesses go bust do so not because of a lack of profitability, but because of cash flow.

Do I have the right to ask for 28 days to sift through paperwork?
You have a legal right to query the amount of debt owing you and to ask for proof of delivery (please note if he can't produce asigned delivery note for a boiler you know full well you have fitted, that doesn't mean you don't have to pay, as title will still remain with him, and he can serve notice on your cutomer to get his boiler back. Not that he would get it, but it would certainly screw your reputation up.

If you are asking do you have a legal right for 28 days without paying the stright answer is NO! But (there is always one) all parties must act fairly. You have not acted fairly with this supplier, so it is unlikely he will be overly flexible. Looking at it, he has already given you 10 days or so.

Because I am responsible for the debt, even the 15 k I haven't been paid what sort of payment terms am I legally allowed to offer and adhere too??
Whatever was on your terms of purchase. In short LEGALLY he can demand everything that is outstanding, can take you to court, and can slap an order against your property if you fail to keep to any agreement. if he takes you to court you will have to produce a statement of affairs in order to come to an agreement.

You are admitting to owing circa £21k do you have anything you can offer in order to pacify him as a show of goodwill?

 

[businessfunding]

I fully support the above posts, however at a practical level I suggest that you must prioritise this over everything else, otherwise you just become a busy fool..

Take time out to get on top of your creditor / debtor situation and talk to people.

Without knowing this creditor, I am going to guiess from your post that he has tries conventional collectiobn methods but you have not properly responded - going to a solicitor is an act of frustration. I may be wrong, but in either case a meaningful ongoing dialogue can prevent a lot of problems.

August stress-relief break - sort out your cashflow!

 

[CashManagement]

If you would like some help to recover the money you are owed, then send me a PM with your details and I'll get in touch.
This would leave you the time to focus on sorting out this account and continuing to manage your business