This debt arose when the West Sussex-based creditor was subcontracted to carry out works by the West Midlands-based Debtor. Both companies operate in the façade and cladding industry. A purchase order was issued following the acceptance of a labour-only quotation to install curtain walling at a site in London.
Six installers arrived at the site on the date agreed to find that no materials had been delivered to the site. This became an ongoing theme, with delay after delay resulting in the project being abandoned by the end client after six weeks. The project should have been completed in four weeks.
Dispute Squashed
Invoices and accompanying timesheets were issued and immediately disputed by the debtor. They quite rightly claimed that the creditor and not fulfilled the brief and completed the works. Further that they would not pay unless they were paid by the end client, who was refusing to pay the full agreed contract price. While the debtor was correct in that the works had not been completed, it was their fault and not the creditor’s, whose installers had been on-site at all times.
With the help of the creditor, who had compiled a complete log of the failed deliveries and delays, the debtor’s dispute was easily quashed, and they accepted liability. However, they also advised that due to non-payment by the end client, they were not in a position to pay in full immediately and requested more time to pay instalments.
Our client was not unsympathetic to the debtor’s situation as they had contacted the end client, who confirmed that they did not intend to pay the debtor in full or had made any payment to them. The client was agreeable to receiving payment in three equal monthly instalments. Advocate Commercial Debt Recovery administered the payment plan, contacting the debtor before each instalment was due. Each payment was made on the date agreed, with the funds being transferred to the client via a same-day payment. Full payment, including Advocate’s fees, was achieved in a little over two months.
The Benefits of a Payment Plan
While accepting a payment plan can be frustrating (especially with aged debts), it is often preferable to taking Court action. It usually takes at least three months for a hearing date to be set, so if a payment plan of no more than three months is agreed upon, then the timescale is favourable compared to Court proceedings. Unless the debt is of a very high value, we never recommend that a client accept a payment proposal that extends beyond three months. The most important consideration with a payment plan is that the initial instalment must be paid immediately. An immediate payment evidences the debtor’s commitment and ability to settle the debt in full. It is very rare for a payment plan to default once the initial instalment has been paid. The debtor can still be taken to court if a payment plan is not adhered to. With a written payment plan agreement to present as evidence in Court, the chances of a successful debt recovery are almost guaranteed.