Company Claiming Cash Flow Problems

[rowzone]

I have two invoices now outstanding with one company I do a lot of work for.

It is a Franchise business and the owner is claiming a cash flow problem so has not been able to pay my last two invoices.

What rights to I have to reclaim the money, do I just wait and see what happens as she has said she hopes to be able to pay the most overdue one before the end of the month?

What is annoying me is that although she is claiming cash flow problems she has apparently just taken on new staff, yet my invoices are remaining unpaid?

Am I just being a mug if I just wait until she pays them when it suits her?

Should I be charging her interest on them whatever as they now are both overdue or should I push for payment by a Winding Up order?

Any advice would be much appreciated

 

[Business News]

Send your customer a copy of your company credit policy, if you haven't got one then you should have and this would be an opportune time to pen one. Should you need to write one go along the lines of credit terms are X days, account on hold 'Y' days and account closed 'Z' days with legal action scheduled 1 week after Z days.

With a credit policy you apply your credit uniformly and nothing is personal as you are merely following your internal credit procedures.

Barry

 

[Zeno]

If you do a lot of work for this company then it may be prudent to try and preserve you relationship which will not happen if you slap a winding up order on her.

That said, she is effectively using you as cheap finance right now so maybe try to reach a compromise.

Good customers are not good customers if they do not pay so if she does not stick to your agreement then see about legal action.

 

[Lime One]

You can charge contractual interest if it is in your terms or statutory interest on B2B debts as well as a penalty on each interest overdue over 30 days. Continue to chase as you would do normally and do not get caught up in their business cashflow stories. Letter before action then consider court action or stat demand if over £750 is owed.

 

[lesliedocherty]

i agree with zeno, slap a winding up and thats 1 lost customer, up to you to decide if you want to do business with the person.

when was the invoice due and when do they plan to pay it by ?

 

[Lime One]

Slapping a winding up order on a business take more fees. Depending on what is owed there are much more effective ways of making your debt the top priority for payment.

 

[rowzone]

I invoice her monthly and my current terms just state 7 days from date of invoice, the one invoice is now 2 months overdue! Total now outstanding is nearly £1,500. So for the future I think I shall be adjusting my credit terms to show the full timeline of payment expected.

I do not have any inference about charging interest so guess it will be the standard statutory interest which is I believe 8% + current rate of 2% is this correct?

As to preserving the relationship am in two minds about that as this maybe the final straw that has broken the proverbial camel's back, personally think that she has been lucky that I have continued to do work for her for this long as she goes through her own staff on a regular basis!

But for now think maybe best to point out what interest should be due on what is already outstanding before I go down the legal action route.

 

[credit control service]

There are debt collection companies out there that will collect your debt on your behalf - some (like TAK) can do this without charge to you - we retain the late payment fee and interest paid by your client and you get the full invoice amount.

TAK have 2 objectives : 1) collect your cash 2) retain your relationship with your customer where possible. (Some other agencies ignore number 2 all together.)

Employing a 3rd party to collect your debt helps you to retain your relationship with your client and show's you should be taken seriously.

You can see details of late payment legislation in the 'useful tools' section of our website, and also guidance on debt recovery if you'd prefer to do the work yourself.

Please get in touch if you'd like to discuss - google us for contact details.

Jeremy Milligan
TAK-Credit Management

 

[NTW]

Just browsing through, not sure if you have worked this out or not but thought I would throw in my 2 pence.

We had similar issues, but by the sounds of it on a slightly larger scale. We eventually outsourced our invoicing to a factoring company (Hitachi Capital Invoice Factoring).

Meant that the stress of chasing debtors was lifted and we could concerntrate on other things.

Anyway, might be of interest?