Advocate has recovered £12K from an international IT firm 24 hours after being instructed. The debtor offers a trifecta of services geared to save companies money on IT infrastructure. Firstly, they recruit candidates and contractors to serve end customers. Secondly, they provide strategic management information systems covering operational, tactical and strategic functions. Where sufficient cost savings cannot be achieved the debtor provides access to outsourcing as their final service offering. Nearing their third decade of trading, competition is strong and pricing is fiercely competitive.
First Impressions
The debtor implements the kind of changes that shape multi-million-pound companies for years, if not decades to come. Our client has barely a tenth of the debtor’s trading years behind them but carries great ambition. Looking to combine business qualifications and IT accreditations, our client set up the business with hopes of emulating the path of well established prosperous competitors. Tantalisingly close to taking on a second employee the economic downturn hit, and the sole director remained the company’s only employee. Being tempted with a six-figure subcontractor agreement, our client made an exception to their ‘main contractor only’ rule. Knowing the end customer to be a multi-billion-pound insurance company and cash-rich, it seemed a safe bet with useful marketing prestige to attract customers further down the line.
Fact-Finding
Without real-time credit reference data, the debtor appeared to be in strong financial health. On instruction, Advocate saw a different picture. Revenue was in sharp decline and the company was haemorrhaging money. Historical accounts blamed the loss of a major customer who had provided an uncomfortably large percentage of turnover. Headcount dropped in line with the necessary evil, which is corporate restructuring. County Court Judgments are typically a sign of financial distress, but the debtor’s record remains unblemished. A new shareholder injecting cash into the business helped project a façade of smooth waters and low risk. With that real-time information in hand, it was unsurprising the entire debt was paid by CHAPS 24 hours from Advocate Commercial Debt Recovery commencing action.
Why Was Debt Recovery Needed?
As a small business perched precariously on the pedestal of solvency during a recession, an overdue invoice of £12K had left a big hole in cash flow. Previous invoices had been paid on day 30 as per the subcontractor agreement. This had been a regular occurrence for several months. When the £12K became overdue, Accounts Payable raised a payment terms query. They claimed the invoice should not be on 20-day terms and was not due for payment for another ten days. Alarm bells started ringing because the invoice was actually 30 days old and didn’t stipulate lesser terms. In the world of commercial debt recovery, that goes down to raising a dispute for dispute’s sake. A nonsensical query is a hallmark of playing for time. Having realised Advocate was days away from issuing a claim in court, payment could not be pushed back any further. When full payment, including the statutory late payment charges, arrived, the debtor apologised, now sighting annual leave as the reason for late payment. In Advocate’s world, apologies are graciously received, but they are no substitute for payment.