Unless you are in a particular field of construction or are an expert in concrete, the chances are you won’t have given chlorides, nitrates, and aggregates much thought of late. The grey-beige sludge-to-stone is the most used man-made material on earth, and with that comes tremendous variety. Getting the mixture wrong can cost companies millions and people their lives. Thankfully, construction is highly regulated, and independent concrete testing companies (like our client) exist to ensure compliance with British standards. With their onsite and laboratory testing capabilities, our client’s customer base is made up of local, national and international concrete contractors.
Poor Credit Rating
Having onboarded a national contractor, our client invoiced £13k during the first four months of testing. Because all testing is done by appointment, circumstances outside the creditor or debtor’s control are always going to exist. In this case, our client noted a higher-than-average amount of cancellation charges for aborted or wasted visits. This lack of communication was a bad omen for payment.
As part of the initial onboarding, our client agreed to submit invoices using an online portal. Having completed the laborious process of keying in each line of the multi-page invoices, payment was not forthcoming, and our client received no feedback. Contractual payment terms were 30 days at the end of the month, yet on instruction to Advocate Commercial Debt Recovery, the oldest invoice was 200 days overdue. Add to this a poor credit rating and industry talk of this subsidiary entering administration. We had enough concern to warrant a Notice of Insolvency Proceedings.
Poor Communication
Upon first contact, the accounts payable team advised that a different subsidiary would renew our client’s contract. The reason for non-payment was attributed to a dispute over terms. The debtor’s standard supplier terms were twice the length of the binding contractual terms. Because of this conflict, the portal invoices were on hold, but no one in the accounts payable team had thought to tell our client. By their own admission, even on extended terms, the debt should have been paid months ago. The difference Advocate makes is to force an issue and break the stalemate. We provided a copy of the contract showing 30 days end of the month, and the debtor provided a payment date. It wasn’t quite a job done on account of the payment being accidentally processed as a BACS rather than a same-day payment. We received full payment of the £13k debt plus statutory late payment charges on day 7 of our debt collection action.
Advocate has worked with this client for several years, and that partnership, coupled with their enviable industry reputation, gives them the luxury of being able to dictate reduced terms with debtors after our intervention. This case was no different, and shorter credit terms are in the process of being signed off, with the parent company opening the door to trade with the wider group.