Advocate has recovered £33K following the renegotiation of a defaulted payment plan. The debtor was also held liable for the statutory late payment charges and recovery fee of 5%. Our client was founded offshore 33 years ago supplying sheet metal products such as ducting and aluminium cladding. Their bespoke ventilation systems are currently in high demand. In recent years our client established a mainland base. They were contracted by a customer in England’s northeast to design, manufacture and install a commercial ventilation system. The debtor is a similarly well-established construction firm, although decades of trading is no guarantee of being able to pay debts as and when they fall due. Hindsight is wonderful but in this case, the debtor appeared to be overtrading. In Advocate’s conversations with the debtor, it became clear they were waiting on payment from other (unrelated) contracts to honour our client’s invoices.
Hot Air Only
During the installation, our client found the debtor was unusually interested in how the contract was being fulfilled and requested information they would not normally be partial to. This was a red flag for payment issues later on. In line with our client’s reputation, the system was installed perfectly the first time without any snags or faults. With the £33K approaching 100 days overdue the client got in contact with Advocate to discuss their situation. It transpired the debtor initially avoided reciprocating contact. When our client learnt the end customer had paid all monies (less retention) to the debtor, internal escalation was sought. The debtor subsequently denied being paid and requested a payment plan lasting 12-weeks. This was reluctantly agreed, and the first instalment defaulted on a few days later. The missed payment was blamed on a member of staff being on annual leave that day, but our client was already wise and knew the person was mid-way through a fortnight’s holiday.
Response to Advocate’s instruction was initially met with the same type of excuse. We immediately declined the suggestion of reinstating the 12-week payment plan on grounds of the recent default. Inability to pay the £33K overdue debt was evidence enough for a Winding Up Petition to be considered. Although the client wanted immediate payment, they were not unsympathetic to the debtor’s overtrading predicament and were willing to entertain a shorter duration payment plan if fully managed by Advocate. Just 24 hours after Advocate’s instruction, a firm commitment had been obtained for payment over 5 weeks to clear the £33K plus statutory late payment charges and recovery fee. We set a caveat of court proceedings in event of default and followed up with the debtor ahead of each instalment. Advocate’s managed payment plan was successfully completed in less than half the time of the debtor’s original 12-week proposal. As the debtor bore all our costs under late payment legislation, the client received the full value of their invoices. That’s the advantage of Advocate’s free commercial debt recovery service.