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Outstanding Invoice, Should I use Debt Recovery ?

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CatherinneWest

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Apr 11, 2018
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Hey Everyone,

Long story short, working with a new client, payment terms are within 7 days. Invoice was sent on September 3rd (invoice value is £2900) , payment due by September 10th. Nothing Received.

After various emails, and promises of payment, I am now being ignored by the owner of the small business. My final email to them was yesterday afternoon asking them to have cleared payment in my account by 4PM today (September 25th 2018) ... which I am hoping will happen but highly doubt!

I've spoken with friends and they advise to use a debt recovery firm, I have contacted two, one who charges 20% if the debt is recovered and the other who charges £280 costs plus 15% of the debt when recovered. Both services sound OK and the latter recovery firm will also make a visit in person to the business (they have a small high street store in Stoke Newington, London)

There seems to be no dispute on their side that we are owed the invoice, hence the continuous promise of payment..... however we really have a hit a brick wall.

Is there any debt recover firms you could recommend or perhaps recommend another course of action?

Thanks in advance,
Cathy
 
Thanks for your replies,

I know the CCJ route etc, however it seems like a much slower process and thought a debt recovery specialist may have more impact..?

I have been advised to send the company an LBA (Letter before action) which I have done. If that doesn't get any joy, then I will need to seriously consider my next steps.
 
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Stat Demand them. Non-payers make me sick.

Send a final letter beforehand giving them a set time and date by which they need to pay in full (give seven business days) failing which you will commence steps to have the company wound-up without any further notification.
 
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Hi Cathy

Send a letter before action (recorded delivery) stating that you intend to recover outstanding monies. If you Google letter before action templates there is plenty available online for free. Try and keep the communication going from your side and keep a record of calls. Could you offer staged payments half this week half in 2 weeks time or something like that?

That will take it over a month that the monies are due. That will demonstrate to the court that you have shown understanding in relation to the outstanding debt and made every effort to be amicable.

Then file a claim at https://www.gov.uk/make-court-claim-for-money it will cost you £105 if you file online which you add to the outstanding amount. You can also add interest from the day the monies become due (7 days after delivery) It explains how to work that out also. You can also opt for mediation but that is up to you.

Once you get the judgement if he doesn't pay then you can pay £70 (again added to the debt) and the court bailiffs attend and look to recover.

Its a long process but it stops anytime the guy pays up. I personally think its the cheapest option as the cash you pay to for the court and bailiffs gets added to the debt. With a debt collector you have lost 20% immediately.

There is a guy on here that offers small claims service he is quite helpful. However you may feel confident to have a go yourself. I have only used it once myself for a client I just took my time read up on it and when I was unsure I called the court who I always found very helpful.

Good Luck
 
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Thanks so much for your replies!

I have now sent a LBA Letter, I got the template online.

This seems to have caused a bit of a push saying that they 'assure us that a cheque was sent last week' , however this hasn't happened as we haven't received anything and dont accept cheques!

At least we have got a reply now and its opened communication back up. I have gave them till 4PM today to make payment in full to our account , fingers crossed :)
 
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CatherinneWest said:
After various emails, and promises of payment, I am now being ignored by the owner of the small business. My final email to them was yesterday afternoon asking them to have cleared payment in my account by 4PM today (September 25th 2018) ... which I am hoping will happen but highly doubt!
Click to expand...

It's all well and good sending emails but have you actually picked up the telephone and spoken to someone?
 
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CatherinneWest said:
Thanks so much for your replies!

I have now sent a LBA Letter, I got the template online.

This seems to have caused a bit of a push saying that they 'assure us that a cheque was sent last week' , however this hasn't happened as we haven't received anything and dont accept cheques!

At least we have got a reply now and its opened communication back up. I have gave them till 4PM today to make payment in full to our account , fingers crossed :)
Click to expand...

While they may be delaying for genuine reasons or to mess you about, they may be delaying because the company is having cashflow problems.

Chase the debt by all means, just be prepared for possibly getting little or none. And don't lend them money again any time soon.
 
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This is a case where picking up the phone works better than email, especially with a good credit controller.

I am amazed at the "don't accept cheques" for an account. This is a matter of principle being more important than getting paid.

The legal world does run to a different timescale than the rest of us, so once you go down that route then be prepared for things to take a while. Most debt recovery companies will go down this route and if your customer knows the ropes will realise this and hang it out to the full extent it can.

To be honest 7 days credit is effectively the same as payment before delivery so why not just do this moving forward and remove all the stress.
 
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pentel said:
The legal world does run to a different timescale than the rest of us, so once you go down that route then be prepared for things to take a while. Most debt recovery companies will go down this route and if your customer knows the ropes will realise this and hang it out to the full extent it can.
Click to expand...

Many years ago I was doing a spot of credit control and threatened a very slow payer with County Court action to which he replied "Oh, thank you very much" as he knew that meant a further four or five months credit minimum if he played it correctly
 
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Blaby Loyal said:
Stat Demand them. Non-payers make me sick.

Send a final letter beforehand giving them a set time and date by which they need to pay in full (give seven business days) failing which you will commence steps to have the company wound-up without any further notification.
Click to expand...

I would only use that as a threat if you fully intend to carry it out
 
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Blaby Loyal said:
Stat Demand them. Non-payers make me sick.

Send a final letter beforehand giving them a set time and date by which they need to pay in full (give seven business days) failing which you will commence steps to have the company wound-up without any further notification.
Click to expand...
Can they issue a Stat. demand without first obtaining a CCJ?
 
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In reality , whilst it is an inconvenience the debt is neither substantial not significantly late - the sledge-hammer approach is likely to waste money and create unnecessary bad will with what could be a decent customer.

My suggested course of action would be

- Phone call or visit to politely explain why it is important to you that you are paid promptly.

- Letter before action.

- Complete MCOL forms and send by email.

- Submit MCOL forms

The most powerful step, by far is the sensible conversation.
 
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Lisa Thomas said:
Can they issue a Stat. demand without first obtaining a CCJ?
Click to expand...

Yes you don't need a CCJ to issue a stat demand . During my studies I learned that this was quite a popular method as there are limited costs involved . It should however be done by a solicitor who I can recommend :)
Personally I see no point in doing this unless you fully intend to see it through
Its is a bit like a phoney war when claimants fail to follow through with their threats
 
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I've been advised by Solicitors that the CCJ is usually needed first.

I've issued many Stat demands, you don't necessarily need a lawyer to do it.
 
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I don’t know your business, nor how much the figure owed is desperate to you surviving. So apologies in advance if it is. But am I not the only one thinking that taking this course of action at this stage is a little heavy handed? Surely you are going to jeopardise any future work here?

Have you tried picking up the phone? A request to speak to the boss/MD on a personal level? Even if it is desperate to allow your business to run then an explanation of this and a plea to be paid would serve better in the long run than defaulting to recovery action over a 2 week overdue debt?
 
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As above. Chasing money can be frustrating but IMO polite telephone calls are better than emails (which are trashed and easily forgotten). If you persevere and strike a reasonable chord you may just get the money and also retain them as a client.

Payment within 7 days? Why??
 
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Dimo said:
As above. Chasing money can be frustrating but IMO polite telephone calls are better than emails (which are trashed and easily forgotten). If you persevere and strike a reasonable chord you may just get the money and also retain them as a client.

Payment within 7 days? Why??
Click to expand...

Im not sure why you would ask that question our terms are payment on booking so I think he is being very generous offering seven days credit to companies that might go bust tomorrow
 
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Thank you all for your replies and advice,

In terms of an update, the client has said that 'we sent a cheque on Friday' and 'its up to you what you do with it, it is outwit our control' , This of course hasn't arrived and i would have thought it would have been with us by now... Any way as part of our terms we simply do not accept cheques. We use the TIDE banking service which don't take cheques period so it's not our rule.

My question now is, do I wait a few more days for the cheque to arrive.... and then setup a bank account specifically to pay the cheque in and then bank it and see if it clears?

Or, get the debt collection agency involved to chase and recover payment ?

PS, to everyone saying re: phone calls, phone calls have been made and a very good rapport kept with the client but the relationship has turned sour sinking asking for payment. Our payment terms are within 7 days which all of our clients agree to. We do offer flexibility by allowing up to 14 days with some clients, however, this is now nearly three weeks over the 7 day payment terms sadly..
 
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So basically they are lying to you.
Yes, take further action. If they can pay by cheque they can pay by a method your bank will accept. Without delays.
 
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Sounds like something for my Albanian pals down at the car wash. You get half and they get half plus whatever else they can 'agree' with the debtor.

Strangely they didn't ask for a Deed of Assignment or any of that Know Your Client malarkey.
 
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Thanks Mr D, I have sent them a rather nice email stating our case for the final time, and explaining further into why we don't accept cheques. A simple phone call or login to online banking would get this resolved , however, they seem unhappy to do this.

I have tried to call etc but sadly no answer now. I am hoping to have an update from them by close of play today and have the debt collection company on standby to proceed if we don't get anywhere.


Arghhh, the joys of owning and running a small business, where each invoice is so important!
 
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Thanks Blaby Loyal, I do tend to agree and really don't wish to proceed with the debt collection company as it is rather unpleasant for all. However it seems like a final resort if the client is unwilling to communicate.
 
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Lisa Thomas said:
I've been advised by Solicitors that the CCJ is usually needed first.

I've issued many Stat demands, you don't necessarily need a lawyer to do it.
Click to expand...

I think a stat demand can be issued where there's sufficient evidence that the debt is owed. If the customer were disputing the debt then you'd need a CCJ first.

In terms of the debt itself, anything under 4 weeks, for a company that's been around 40 years wouldn't be high on my list of worries. Lots of SME's with an accounts person will have policies along the lines of invoices are paid on the 30th of the month following the month of delivery. (Irrespective of what your terms are)
 
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JEREMY HAWKE said:
I asked is your solicitor a good one ?

Then I noticed your Plymouth number and then I assumed it was a Plymouth solicitor your were asking and hence me lack of confidence in your advice :):):):)
Click to expand...

I use lots of Solicitors and most of them are not Plymouth based although I don't see how/why their geography indicates what level of intelligence they have.

Kindof being racist here methinks...?
 
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My point is as you are not a bank, why are you giving a new company this much credit, if they can promise to pay in 7 days then they can pay a pro-forma invoice the same day as the order

Tighten up on your cash, most companies now days have company debit cards for sums like this and reserve credit terms for long term customers and try your best to never give any

In the companies view its probably nothing to do with the person who ordered the goods or service but the way the accounts department works which is normally based on 30 days from the end of the month the invoice was raised
 
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