Over Due Invoice

[defrost77]

I have a problem with 1 overdue invoice and a 2 one which will be over due after this Thursday for the same company and would like some advice

We are an IT firm who does work for schools and local authorities. A local authority asked us to handle the data and AV aspects of a rewire project for School. In response to their request, we provided a quote, which we were asked to subsequently shared with several building contractors bidding for the project. We furnished the builders with our quote and clearly outlined our payment terms: 30 days from the date of the invoice, with no retention. This information was provided to the builder who won the contract from the local authority. Subsequently, we received a purchase order (PO) from the builder.

Our team completed the first part of the quoted work on 19th July and promptly submitted an invoice to the builder, for nearly £3000. However, we did not receive payment by the due date of 18th August 2023. On 23th August 2023, we were informed that our invoice was being processed under their purchase accounts system, and payment would be made via cheque.

Following the completion of the second part of our quoted work on 29th August 2023, we submitted another invoice via email, amounting to just over £4000. Despite multiple attempts to communicate with the builder through emails and phone calls, we have not received any response or payment for the first invoice. (9 emails & 4 phone calls)

In light of this, we took the initiative to write to the builder on 8th September 2023, seeking payment for first invoice by the 22nd September 2023. Although the letter was signed for on 11th September 2023, we have not received any payment or communication.

We have received email confirmation from School that our work was satisfactorily completed.

As a result, I’m not sure what the best course of action is next whether to send a letter before action for both invoices, when the second invoice because overdue on 28th September 2023 using one of the fix price letter from a solicitor or to send a statutory demand on 28th September 2023 for both invoices.

The builder has been going since 1960's and has no CCJ’s against them and turnover of about 4 million. But I have been informed that they never pay their bills on time, but will paid eventually they just make you wait as they no longer need you.

 

[Ian J]

No-one will ever get a building contractor to pay within 30 days whatever the terms of the contract stipulate as they will generally "pay when paid" and schools and Local Authorities won't pay that quickly.

Don't waste your time writing letters as you need to get on the blower and speak to someone who has the authority to deal with your question

 

[defrost77]

No-one will ever get a building contractor to pay within 30 days whatever the terms of the contract stipulate as they will generally "pay when paid" and schools and Local Authorities won't pay that quickly.

Don't waste your time writing letters as you need to get on the blower and speak to someone who has the authority to deal with your question

The Building contractor is on 30 days from date of Invoice from the Local Authority. The first valuation (invoice) from the builder when in first week of August and has been paid first week of September. The final valuation (invoice) when in first week of September for payment first week of October.

The building contractor have been paid by the Local Authority for our first invoice and still have not paid us!

I have been on the phone but no one is available to talk or reply to email. i.e getting the run around.

 

[DWS]

Can you not visit their premises to chase up the debt?

 

[Mark T Jones]

How so you know they have been paid?

As @Ian J has said, an visit / face-to-face (non aggressive) is always the most effective start

Failing that, I'd personally start with LBA for the first invoice - the aim being to flush intent and to demonstrate that you will actually act.

Remember golden rule #2 - do what you say you are going to do

 

[pentel]

Did you carry out a credit check on the builder?

Do you want to work with them again?

If your answer is yes to the first and no to the second then it would have been wise to have written your letter of 8 September as a letter before action, but it seems this was not the case.

It would be wise to get your full timeline down on paper and making sure you have a watertight case then issue a letter before action immediately. You need to give 14 days to pay.

If payment not received then follow up with a "we are about to take action letter" showing the cost to the builder of doing so and the interest you will be charging from the date the debt should have been paid ( base rate +8%). Give it a couple of days and then file your claim. They can then hang it out for up to a further 28 days before paying you (assuming no defence.)

This whole process will probably take up to 60 days in total.

Hopefully they will pay up before judgement however if they don't you then have to decide what to do about enforcement.

 

[MBE2017]

Have you kept ownership of the goods until paid yourself? One way to apply pressure would be to contact the school to arrange a day to reclaim the unpaid goods. I imagine you would hear back from the builder the same day.

 

[defrost77]

How so you know they have been paid?

As @Ian J has said, an visit / face-to-face (non aggressive) is always the most effective start

Failing that, I'd personally start with LBA for the first invoice - the aim being to flush intent and to demonstrate that you will actually act.

Remember golden rule #2 - do what you say you are going to do

Directly from the local authority when I asked if there was any issue with our work that would have stop payment when I spoke to them after I was getting no communication from the building contractor.

Totally agree, a phone call normally gets some type of response, That’s why I got the “your invoice is being processed and we will send a check out” just before we went the second bit of work 23th August as they wanted us back on site. Since then no communication. It was the one of their employee who told us when we asked about payment who said, "they never pay their invoices on time and you will get your first invoice fairly quickly. It will be your final invoice that you wait a long time for as they don’t need you anymore." but by that point we already had an overdue invoice.

 

[pentel]

That’s why I got the “your invoice is being processed and we will send a check out” just before we went the second bit of work 23th August as they wanted us back on site

Missed opportunity to collect the check for the first payment before returning to site.

Always take the opportunity to get paid while you have some sort of hold over the customer.

 

[defrost77]

Did you carry out a credit check on the builder?

Do you want to work with them again?

If your answer is yes to the first and no to the second then it would have been wise to have written your letter of 8 September as a letter before action, but it seems this was not the case.

It would be wise to get your full timeline down on paper and making sure you have a watertight case then issue a letter before action immediately. You need to give 14 days to pay.

If payment not received then follow up with a "we are about to take action letter" showing the cost to the builder of doing so and the interest you will be charging from the date the debt should have been paid ( base rate =8%). Give it a couple of days and then file your claim. They can then hang it out for up to a further 28 days before paying you (assuming no defence.)

This whole process will probably take up to 60 days in total.

Hopefully they will pay up before judgement however if they don't you then have to decide what to do about enforcement.

Yes to credit check, No CCJ's, etc

no to working with them again. due to no communication. I understand that you normally get paid after they have been paid, in the past with other builder on the same type of problem. You get an email / phone call saying we will paid you on xx when we are paid.

I have the full timeline etc on paper, plus documents so letter before action seem the way to go.

 

[defrost77]

Have you kept ownership of the goods until paid yourself? One way to apply pressure would be to contact the school to arrange a day to reclaim the unpaid goods. I imagine you would hear back from the builder the same day.

Yes kept ownership but the goods are only some cable & face plates etc. The LA is aware, Builder has told them, "has confirmed that their finance department are aware of the XXXXXX invoice and have it in hand". That was last tuesday and still on reply from builder!

 

[defrost77]

Missed opportunity to collect the check for the first payment before returning to site.

Always take the opportunity to get paid while you have some sort of hold over the customer.

Yes I know, it was a mistake on my part. I should have refused to go site again until the funds were in our bank account for first invoice!

 

[Gyumri]

On 23th August 2023, we were informed that our invoice was being processed under their purchase accounts system, and payment would be made via cheque.

Was this in writing?

Despite multiple attempts to communicate with the builder through emails and phone calls, we have not received any response or payment for the first invoice. (9 emails & 4 phone calls)

It seems you were merely told by somebody that that would happen.

d the interest you will be charging from the date the debt should have been paid ( base rate +8%)

You can't claim Judgment Act rate of 8% until you have a judgment

I got the “your invoice is being processed and we will send a check out”

Was this acknowledgement in writing? If so then you could send to their registered office a stat demand for a liquidated sum. However, a court claim would lead to a much quicker outcome and summary judgment.

I would email the letter before action as others have stated and also post it without wasting further time.

 

[defrost77]

Can you not visit their premises to chase up the debt?

3 hours round trip to their offices from here. 3 office staff, plus director. Young girl on reception sounds embarrassed when I ring. If they are not talking to you on the phone or reply to email, plus the client is asking them question about it. I can't see any point to going to their office, by this point I would have expected some type of response. I have spent 3hrs+ so far chasing the first invoice.

 

[pentel]

You can't claim Judgment Act rate of 8% until you have a judgment

Late commercial payments: charging interest and debt recovery

Late commercial payments - interest and debt recovery costs you can charge businesses for late payments

www.gov.uk

However, a court claim would lead to a much quicker outcome and summary judgment.

We have found this to be the case.

 

[Newchodge]

Directly from the local authority when I asked if there was any issue with our work that would have stop payment when I spoke to them after I was getting no communication from the building contractor.

Totally agree, a phone call normally gets some type of response, That’s why I got the “your invoice is being processed and we will send a check out” just before we went the second bit of work 23th August as they wanted us back on site. Since then no communication. It was the one of their employee who told us when we asked about payment who said, "they never pay their invoices on time and you will get your first invoice fairly quickly. It will be your final invoice that you wait a long time for as they don’t need you anymore." but by that point we already had an overdue invoice.

Perhaps, next time, you refuse to complete the project until the first invoice and half the second has been paid.

 

[DWS]

Your choice obviously but 3 hrs is hardly a lot if you want to get paid, you would be surprised what a personal visit may achieve

 

[defrost77]

Was this in writing?

It seems you were merely told by somebody that that would happen.

You can't claim Judgment Act rate of 8% until you have a judgment

Was this acknowledgement in writing? If so then you could send to their registered office a stat demand for a liquidated sum. However, a court claim would lead to a much quicker outcome and summary judgment.

I would email the letter before action as others have stated and also post it without wasting further time.

Yes all in writing (emails) hence why I went back onsite on the 29th.

Late payment is a statutory right, however to get them to pay it you're right, mostly likely would needed a judgement

Yes in writing, hence why asking about my options either stat demand or letter before action \ court claim

 

[defrost77]

Your choice obviously but 3 hrs is hardly a lot if you want to get paid, you would be surprised what a personal visit may achieve

True but if I did a personal visit I would take a stat demand to delivery at the same time.

 

[defrost77]

Perhaps, next time, you refuse to complete the project until the first invoice and half the second has been paid.

I have done quite a few of this type of projects and never got to this stage, with other building contractor. Next time pro forma invoice before we start

 

[Gyumri]

True but if I did a personal visit I would take a stat demand to delivery at the same time.

Personal visits are unnecessary - just go straight for a summary judgment based on their acknowledgement of the debt as they can have no defence.

A stat demand is potentially a long winded process and the debtor is bound to apply to set it aside on some pretext that the debt is in dispute. That will then take another year to resolve.

So a claim form followed by an application for summary judgment will give you a court order which you can then enforce. The receipt of the claim form is likely to produce payment from the debtor quicker than any other procedure.

You are not likely to know the procedure to do it yourself so a solicitor would be worthwhile contacting to do the donkey work.

 

[pentel]

Late payment is a statutory right, however to get them to pay it you're right, mostly likely would needed a judgement

You don't need a judgement. You claim this when you put the claim in. Once it has been accepted at money claim on line they have to pay the interest as well as the court fee to have discharged the debt. If they don't pay either the interest or the fee you just carry on with the process.

 

[MikeJ]

We furnished the builders with our quote and clearly outlined our payment terms: 30 days from the date of the invoice, with no retention. This information was provided to the builder who won the contract from the local authority. Subsequently, we received a purchase order (PO) from the builder.

Going back a stage, does the PO say anything about payment terms or have terms and conditions attached? If you've accepted the PO, then that's the contract, not your quote.

 

[defrost77]

Going back a stage, does the PO say anything about payment terms or have terms and conditions attached? If you've accepted the PO, then that's the contract, not your quote.

The PO has no payment terms on it or attached it was send by email.

We provided our terms and conditions with the quote and on the invoices. If there was a discrepancy between what they thought the payment terms were, I would expected some type of response, but there has been deadly silence.

As far as I understand it, the default for payment in the UK is 30 days from date of invoice for it to be different than that both parties have to agree to it in writing.

 

[Ian J]

Personal visits are unnecessary - just go straight for a summary judgment based on their acknowledgement of the debt as they can have no defence.

In that type of industry a defence can always be drummed up at will

 

[Gyumri]

In that type of industry a defence can always be drummed up at will

Correct - but if the debt has already been acknowledged in writing with a promise that the cheque is being processed then any defence is going to be struck out by the judge without wasting much time.

The receipt of the claim form itself should trigger the overdue payment and would be the quickest way for the OP to get payment.

I think Moneyclaim online or whatever it is now called can be started from the comfort of one's armchair.

 

[defrost77]

In that type of industry a defence can always be drummed up at will

You are right that is why I went directly to the customer who actually asked me to do the work as the approved supplier, got confirmation in writing that our work was completed satisfactory, and that the Builder had submitted a valuation for our work and being paid for it.

Very difficult to argue. There’s a problem with the our work when they’ve submitted an invoice for our work and it’s been paid by the customer.

 

[JEREMY HAWKE]

I recommend @Steve Thornbury a good member on here running a good debt chasing company
You might get some luck if you get his boys and girls on the case

Before you spend any money on a court case

 

[defrost77]

Correct - but if the debt has already been acknowledged in writing with a promise that the cheque is being processed then any defence is going to be struck out by the judge without wasting much time.

The receipt of the claim form itself should trigger the overdue payment and would be the quickest way for the OP to get payment.

I think Moneyclaim online or whatever it is now called can be started from the comfort of one's armchair.

I agree I think they’re going to ignore the letter before action from myself and only take pay when they get the claim form and probably drag that out to the full extent. But since they have never got a CCJ that implies, they never don’t pay. It's about getting to that stage as quickly as possible.

From what I got told it sounds like this is their normal method of operation drag out payment for as long as possible hence why they’re still using cheques so to delay payment leaving their bank account for as long as possible.

 

[IanSuth]

Ring the company now - tell them if they do not make the payment today so that it is in your account by Friday you will be formally reporting the entire matter with details of dates etc to the Council procurement department and pointing out how it is meaning they are missing their commitment to pay small suppliers within 30 days.

If they think they may miss future tenders it may loosen their purse-strings pronto - make paying you the easy option and holding you off harder than holding off someone else/their bank manager

 

[defrost77]

Ring the company now - tell them if they do not make the payment today so that it is in your account by Friday you will be formally reporting the entire matter with details of dates etc to the Council procurement department and pointing out how it is meaning they are missing their commitment to pay small suppliers within 30 days.

If they think they may miss future tenders it may loosen their purse-strings pronto - make paying you the easy option and holding you off harder than holding off someone else/their bank manager

That is actually already in hand, if payment for the second invoice becomes over due (this Thursday) I’ve already said I’m sending information to the LA procurement department since this building project was done under The Public Contracts Regulations 2015.

Contractors are required to pay subcontractors on the same terms as they get so “ no later than the end of the period of 30 days from the date of which the relevant invoice is regarded as valid and undisputed”

 

[IanSuth]

That is actually already in hand, if payment for the second invoice becomes over due (this Thursday) I’ve already said I’m sending information to the LA procurement department since this building project was done under The Public Contracts Regulations 2015.

Contractors are required to pay subcontractors on the same terms as they get so “ no later than the end of the period of 30 days from the date of which the relevant invoice is regarded as valid and undisputed”

And as you and they are likely small firms there are extra codes of conduct in play as well - are you sure the Directors know that and the receptionist hasnt just said "Oh Defrost77 rang again for his money - i did the usual fob off"

 

[defrost77]

And as you and they are likely small firms there are extra codes of conduct in play as well - are you sure the Directors know that and the receptionist hasnt just said "Oh Defrost77 rang again for his money - i did the usual fob off"

It was mentioned in the letter I sent directly to the Director on the 8th asking for payment by the 22nd. Email to the local authority asking for confirmation that was no problem with the work was sent CC them as well on 14th.

The impression I get about the receptionist is that she’s actually going and asking someone then coming back a few minutes later and saying they’re not available. The office manager on the other hand when I’ve spoken to her, who seems to man the phones after 2:30pm just comes out with fob excuses.

This is one reason why I’m so surprised, as I’ve never had an invoice in the last 15 years go this far as most building contractors, realise it’s easier to pay us as we don’t take the fob off and potentially could cost them future contracts with a local authority.

 

[Michael Loveridge]

Personal visits are unnecessary - just go straight for a summary judgment based on their acknowledgement of the debt as they can have no defence.

A stat demand is potentially a long winded process and the debtor is bound to apply to set it aside on some pretext that the debt is in dispute. That will then take another year to resolve.

So a claim form followed by an application for summary judgment will give you a court order which you can then enforce. The receipt of the claim form is likely to produce payment from the debtor quicker than any other procedure.

You are not likely to know the procedure to do it yourself so a solicitor would be worthwhile contacting to do the donkey work.

Summary judgment was designed as a quick procedure, but in practice it's anything but, due to the gross inefficiency of the court system.

It's likely to be at least three months - often far longer - before an application for summary judgment will be listed. Furthermore, it requires the claimant to actually attend the hearing, which many lay people are understandably reluctant to do.

It's often not economic to employ a lawyer, especially for modest amounts like this, as the court is very unlikely to order the defendant to pay the lawyer's fees, so unless the sums involved are substantial the summary judgment route is not particularly effective.

 

[Gyumri]

I'm inclined to agree. The only point about the claim form after no reply is received from the LBA is that it is
more likely to generate quick payment.

There are plenty of barristers who now operate in a direct access basis and so there may not be any need for the OP to attend court should one go down the summary judgment route. There is an admission that the debt is due and so there can hardly be a credible defence.

 

[Solvelaw]

As has been said above depends whether you want to work and get regular work as sub-contractor. If you do, then I would now seek a directors personal guarantee for all future work. Alternatively you could stat demand them if it is a limited company - however it is a double edged sword and only works when the company is solvent rather than insolvent. I would suggest following them on companies house to see if adverse changes occur in terms of administration / liquidation etc.

 

[Steve Thornbury]

I recommend @Steve Thornbury a good member on here running a good debt chasing company
You might get some luck if you get his boys and girls on the case

Before you spend any money on a court case

Thank you mate

 

[Paul FilmMaker]

So I'm owed £3k by a customer and it's way overdue. Their telephone comms aren't great, there is continual chaos but I'm totally comfortable with being paid late. The reason is I understand how they work because we have face-to-face chats.

We're video production.

So their payments are either hugely late or hugely early. E.g. they paid me five figures, 12 months in early for a project! I was literally looking at my bank account wondering where all the money had come from... On another, they paid me and then cancelled. I tried to give the money back but the person had left, their boss had left and it was such a small sum that no-one was interested plus they were a bit busy because one of their factories had burned down.

Another payment went to a photographer in Italy who forwarded me the money. Because... well, I think you're getting the chaotic picture.

So it's chaos but as long as I am having a coffee with the right person and I can figure out what the latest challenge is, we're all good.

I have no idea what your situation is but with this customer, I give them leeway but that comes from face-to-face conversations figuring out what's going on.

No idea if this is useful but hope it gives you or someone else on here some ideas.

 

[defrost77]

So I'm owed £3k by a customer and it's way overdue. Their telephone comms aren't great, there is continual chaos but I'm totally comfortable with being paid late. The reason is I understand how they work because we have face-to-face chats.

We're video production.

So their payments are either hugely late or hugely early. E.g. they paid me five figures, 12 months in early for a project! I was literally looking at my bank account wondering where all the money had come from... On another, they paid me and then cancelled. I tried to give the money back but the person had left, their boss had left and it was such a small sum that no-one was interested plus they were a bit busy because one of their factories had burned down.

Another payment went to a photographer in Italy who forwarded me the money. Because... well, I think you're getting the chaotic picture.

So it's chaos but as long as I am having a coffee with the right person and I can figure out what the latest challenge is, we're all good.

I have no idea what your situation is but with this customer, I give them leeway but that comes from face-to-face conversations figuring out what's going on.

No idea if this is useful but hope it gives you or someone else on here some ideas.

I agree with Paul communication is always the most important aspect, that’s why, when there was zero communication from what is a first time customer as our regular customer is actually local authority who had already paid the Builder for our work. I started looking at exactly what the legal options were when the emails, phone calls etc had all fell on deaf ears.

 

[defrost77]

Just wanted to let everyone know that the invoices have now been paid as the funds cleared in our account last night .

How I resolve the situation was since had no response to my letter of the 8th September. Last Wednesday 27th, I sent an email to the local authority cc the builder asking if it was a problem with our work that would delay payment and could they confirm if the project was executed under the public contracts regulation 2015. Ie. Main contractors have to reimburse subcontractors on the terms consistent with those they get from the local authority, 30 days from date of invoice.

As soon as it got to the right person within the local authority, they contacted the Builder within an hour and a half of that I had an email promising payment that day. Received the cheque for both invoices on Monday and promptly banked.

Just wanted to thank everyone on here for their help and advice