A sole trader operated Lancashire based specialist light precision engineering company specialising in fabricating aluminium safety enclosures for electrical applications, had issued two invoices totalling £3,370.00 to a Hertfordshire based portable power supplies manufacturing company on 30-day payment terms. The earliest of the invoices had become due for payment over 12 months ago. When chasing for payment, the creditor encountered a series of excuses and delaying tactics, including that payment was imminent. They would pay when they got paid. They were awaiting a large incoming payment, and they were now awaiting funding.
Genuine Finacial Difficulty
Upon instruction, we carried out detailed financial research on the debtor company. It quickly became clear that the company was long established with a good product offering and a decent credit rating, based on the previous years filed accounts. The company had no satisfied or unsatisfied County Court Judgments registered against it and a healthy balance sheet. Looking further into the company’s client base, which was made up mostly of customers in the Aerospace, Marine, Media and Entertainment industries, it was evident that the COVID-19 pandemic had severely impacted the company and they were no doubt in temporary financial difficulty.
We discussed our findings with our client, and it was agreed that the debtor should be offered a short payment plan rather than continuing to demand full immediate payment. If they were unable or unwilling to agree to a plan, the matter would proceed to Court without further delay.
An Amicable Payment Plan was Agreed and Honoured
The debtor was receptive to the idea of paying off the debt in instalments, and we invited them to put forward a fair and reasonable proposal. However, their initial offer to pay in 12 monthly instalments, the offer was neither fair nor reasonable and it was immediately dismissed. Given the age of the debt and the fact that the debtor’s income streams were opening up with the easing of lockdown restrictions, a two-month deadline for full payment was imposed.
The debtor eventually agreed to settle the debt in three equal instalments, with an immediate payment and two further payments at 30-day intervals. We contacted the debtor before the payment date of each instalment to ensure the payments were made as agreed. Each instalment was paid on the date agreed, and our client received a same-day transfer following each payment, resulting in full payment including Advocate’s fees within 60 days.
A payment plan is often the most pragmatic solution if the debtor is suffering from short term cash flow issues. If you consider that the County Court claim process can take in excess of 3 months, a payment plan over 3 months would result in full payment in the same time period that it would take to obtain a judgment, at no additional cost to the creditor or debtor. An amicable payment plan is also more likely to maintain the working relationship and future trade if required.
As you will see from our client’s kind review, they were very pleased with our service and the outcome, a cost-free debt collection.