Department of Trade
Several years back, the Southeast sales team onboarded a single branch of a national department store. Our client was engaged as a secondary supplier. At the time of ordering parts and hydraulic service, the account had yet to trade, although our client had kept the store aware of new product offerings and their relocation to larger premises. Satisfied with the first service, our client was contacted again to inspect a second unit. The importance of effective communication between Sales and Credit Control is easy to underestimate. In this case, Sales had glanced over what they saw as an irrelevant clause about sending invoices electronically. Knowing Credit Control only issues invoices by email, compliance was assumed. Management signed off on 60-day payment terms. Whilst extended terms are not something our client would normally accept, let alone requests from their suppliers, it was a make-or-break requirement of onboarding the store.
Department of Invoicing
Electronic invoicing is becoming mainstream for multi-million-pound businesses. Despite billing several months apart, all invoices were rejected at the same time. Once aware of their obligation to submit invoices through a portal, our client was faced with two unappealing options. The first was to pay an annual subscription for access to the portal and develop a CSV (comma-separated variable) file for uploading invoices onto the debtor’s system. The development cost and annual fee for a secondary supplier, who was unsure of future trade levels, made this uneconomical to pursue. The second and only viable option was to manually key in all the invoice details through a painstakingly time-consuming series of screens and boxes. The only cost here was time and a few extra cups of coffee. All three invoices were submitted and mysteriously went on hold. Communication from the debtor dried up after initially being batted between the store and head office for several weeks.
Department of Corrections
With the oldest invoices now six months overdue, Advocate Commercial Debt Recovery was instructed. Greeted with the prospect of court proceedings, the debtor was motivated to resume dialogue. Advocate established the invoices were on hold because of an error in supplier classification. Our client had supplied GNFR (goods not for resale) but had been classified as supplying GFR (goods for resale). Our Finance contact was equally perplexed at how a scissor lift service could be purchased by a J Doe to accompany their adjustable linen footstall! Classification was amended to GNFR, an emergency cheque was promptly issued to the client for £2.3K, and a bank transfer was made for the statutory late payment charges. A week later, the cheque still had not arrived. It emerged the cheque had been sent to the client’s old premises, which had been vacated two years ago. Again, our Finance contact was baffled as to how a cheque could be issued to any address other than the one painstakingly keyed in through the invoicing portal. Cheque payments in the UK are in a steady decline. Creditors sight the clearing time and lack of postal tracking as reasons for refusing the payment method. To negate just such delays, we instruct debtors to pay the principal debt and statutory late payment charges directly into Advocate’s account. Once the lost cheque was cancelled, a bank transfer of £2.3K was received in Advocate’s account before being forwarded to the client. This debt recovery was certainly an eye-opener for our client. The jury is still out as to whether they will trade again with the debtor, but the effectiveness of Advocate’s debt recovery action, in this case, may just sway the decision.