£15K Recovered from Debtor hit by Customer Insolvencies

When you think of logistics the notion of transporting prized farm animals across Europe does not immediately spring to mind. It’s not like you can stick a 300kg beast on a semi-trailer alongside pallets of giftware and a box of widgets! Now think of a fledgling Warrington based logistics firm accustomed to delivering office supplies, being asked to move some ‘exotic’ farm animals to a collector in France. That is exactly the situation our debtor found themselves in. They reached out to our client, who is a specialist in such matters and holds the appropriate licences, vehicles and qualifications.

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With the price agreed, the animals were safely delivered and a debt of £20K became due 30 days after invoicing. An interim payment on account of £5K was promptly received. The debtor also took the opportunity to advise of a delay in further payments whilst their factoring company changed bank accounts. Had it been true, it would be in the 1% of seemingly implausible excuses which escape the fictional realms. A couple of promised payment dates then came and went. Advocate were instructed when the debt became 42 days overdue. From the outset, our client had advised a willingness to entertain a reasonable payment plan because they are also a family run business. If the debtor chose not to reciprocate the goodwill being shown, Advocate was instructed to seek a winding-up petition.

From Long Haul to Short Hop

With the grounds for a winding-up petition laid before the debtor, they engaged in constructive dialogue. Surprise, surprise, their lack of payment was not attributable to the factoring company changing banking provider! The truth here firmly resided in an all-too-common reality – the debtor had experienced several big customers entering liquidation having clung on for the majority of the pandemic. They were now in survival mode tendering for new contracts and enticing existing customers to up trade. With some encouraging revenue forecasting, an agreement was had to make 3 instalments over a 30-day period. There was no dispute over the principal £15K debt or the statutory late payment charges applied as Advocate’s fee. Each instalment was received on time, and forwarded to the client the same day. The client could now stop carrying the burden of late payment.

Trying to accommodate the debtor’s family-run business nearly came at the expense of our client maintaining their own. It is a cautionary tale that when one business is not proactive enough in pursuing debtors, they run the risk of running out of time and money. In this case, Advocate’s instruction created urgency and facilitated payment from one small business to another.