Advocate has recovered payment of invoices totalling £12K that were 250-930 days overdue at time of instruction. Our client is what some may call an accidental entrepreneur. They are an inventor first and a business owner second. Having patented a water-saving toilet, their continued input was a prerequisite for angel investors. Even with a presence in the southern hemisphere and several international distribution contracts, the firm remains committed to its UK development and manufacturing base. They predominantly sell to construction firms undertaking new commercial builds or refitting dilapidated premises. Their toilets in airports and service stations provide the majority of maintenance and repair revenue.
Cisterning the Delay
The debtor company was incorporated in the 1960s and has been trading longer than our accidental entrepreneur has been out of diapers! The company designs, engineers and maintains the building and infrastructure projects it undertakes. It has specialists in just about all areas of construction, except the unique skills that go with maintaining patented toilet technology. The debt is spread out over an 11-month period covering the installation of new toilets and repairs on vandalised units. Our client’s terms and conditions require any dispute to be notified within 7 days of invoice. Discretion is applied for reasonable delays. One by one the invoices had disputes raised at an average of 70 days overdue. Eager to maintain amicable relations and not jeopardise future trade, our client politely resolved each query within days of being informed. With the benefit of hindsight, the client can now see the queries were nothing other than attempts to delay payment. Had the debtor been willing to follow their own paper trail, the queries could all have been resolved internally. With nothing left to dispute, the debtor went silent and ignored all subsequent requests for payment.
Flushing out Payment
Two years after the invoices were raised, our client’s patience and goodwill ran out. Advocate were instructed. A credit check identified the debtor had a £2K unsatisfied County Court Judgment from the previous year. Going down the route of further County Court proceedings for £12K was never going to yield a result. In pre-pandemic times the courts would consider a winding-up petition for just £750. Companies could and did fold where the petitioner’s cost was more than the principal debt. The Corporate Insolvency and Governance Act 2020 set a temporary threshold of £10K for winding-up petitions. This was brought in to stop swathes of businesses being unnecessarily wound up that otherwise would be viable in post-pandemic times. Faced with the prospect of insolvency proceedings courtesy of Advocate, the debtor found sufficient motivation to pay the £12K and statutory late payment charges just 7 days after our instruction. There is a fine balance between maintaining an important trading relationship and the necessity to receive the lifeblood that is payment. Some businesses can afford to carry debtors and for others, it is simply not an option. In recent years Advocate has seen even the most affluent businesses give higher priority to short term cashflow. Having learnt the hard way, our client will now be doing just that.