Client Pays Wages after £25K Debt Collection

Within all industries, there are subsections and even sub-subsections. This debt collection involved a niche subsection of the recruitment industry. Our client operates traffic management systems to safely accommodate subsurface intervention of the UK’s highways (roadworks!). They employ a number of staff and are main contractors in their own right. The debtor is not just any recruitment agency, they provide temporary staff to ensure utility workers and drivers operate in a safe environment. Over the years both client and debtor have engaged each other, with the client providing operators when the agency pool is low.

Making Road-Works

Staff were urgently required to manage an unusually complicated utility repair. Our client was engaged to cover a shortfall on behalf of the agency. The highway repair was expected to take 3 weeks on a busy urban commuter route. Without enough operators, this could easily slip to 6 weeks incurring backlash from authorities. Our client incentivises their employees in such circumstances by obtaining a higher hourly rate from the agency. The hardware hire is suitably reimbursed to the client keeping it commercially rewarding. A debt of £27K was built upon short payment terms and reached 20 days overdue at the time of Advocate’s instruction. Terms are intentionally short so the client can pay wages at month-end without letting down other creditors.

Digging Up Payment

The numerous County Court Judgments (CCJs) on file showed the debtor was struggling to pay debts as and when they fell due. Advising an intention to issue a CCJ would have ended up with another unsatisfied judgment on file. Within 24 hours of Advocate issuing a Notice of Insolvency proceedings the sum of £12K was received. The debtor made it known they did not appreciate Advocate’s instruction, even though they did not dispute ignoring our client for 20 days. Subsequently, the debtor continued to email the client, who would then bat to Advocate before a formal response was issued by the Case Manager. Mindful of the clock ticking on a winding-up petition, the debtor produced £2K of invoices raised 3 years ago and allegedly unpaid by the client. On speaking with the client it was clear there was no recollection of the invoices or any purchase orders to support them. The debtor could not provide anything other than invoices and handwritten notes of unconfirmed origin. With month-end fast approaching and aware of occasional holes in the transition to a new AP system the previous year, a concession was made. The debtor would have the supposedly 3-year-old debt cleared in a payment of £13K to the client. The client would take a £2K hit against hire costs to ensure wages for the 3-week job could be paid on time. The payment was promptly received and the client was able to pay wages without letting down other creditors.

Statutory Late Payment Charges

With the principle debt now cleared, the debtor turned their attention to avoiding the statutory late payment charges incurred through settling the account late. Because statutory charges raised by Advocate are supported by late payment legislation, the resistance didn’t last long. Payment was received just before our solicitors were to be instructed. Another successful commercial debt collection by Advocate.