Based in Shropshire and trading since 2004, the creditor is a small limited company operated by two directors and three employees. They supply a range of specialist maintenance supplies to engineering and manufacturing companies. A long-standing customer who had paid their invoices promptly for many years did not make a payment for three months, resulting in an overdue balance of £10,072 when the debtor’s account was placed on hold.
Prior to our instruction, one of the directors called us to find out exactly how our service worked. We explained the process, what was required from the creditor for us to commence action, that our debt collection service is free of cost to the creditor, and that we would recover our fees from the debtor.
An All Too Familiar Tale
The director then explained the current situation with the debtor. What followed was a textbook series of events typical of a business with cash flow problems attempting to delay payment for as long as possible. Initially, they repeatedly requested copy invoices, claiming that they had not all been received. They then asked for a statement and time to reconcile the account, claiming that the invoices did not match the total amount to be paid. Then followed a promise of payment at the end of the month, which did not materialise, followed by another promise of payment two weeks later, which never arrived. The creditor then received a bank transfer confirmation. The payment date stated on the confirmation passed without payment. When the creditor queried this, they were informed that there must be a problem at the bank.
Invoices can go astray. A statement and account reconciliation is often required. Sometimes, a payment date is missed. Rarely does an actual bank payment not credit the payees’ account, and very rarely does a problem at the bank prevent payment. If you receive all of these excuses, it’s time to take action and instruct a debt collection company.
County Court Judgment
Upon instruction, we carried out financial checks on the debtor, a Staffordshire-based mid-sized engineering company. The assumption that the company was suffering from cash flow issues was immediately confirmed by an unsatisfied CCJ to the value of £33,500 being registered against the company. It was clear that the threat of Court action would not result in payment.
We issued the debtor company a Notice of Insolvency Proceedings with the intention to serve a Winding-up Petition. The response was immediate. However, the financial director who responded continued to prevaricate. They were awaiting a large payment and would pay next week. One of the directors was arranging a loan to inject capital into the company, and payment would be made the following week.
We continued in our process, ignoring the debtor company’s excuses and advising them on each stage of the escalating insolvency proceedings and the additional costs and charges being incurred. Finally, after almost three weeks, when we reported that our solicitors had commenced drafting the petition and it would be served on the company later that week, we received a CHAPS payment for the full account value and costs and our fees.
We arranged a same day faster payment in the sum of £10,072 to our client, which credited their bank account within 90 minutes of us receiving payment. Our client received an entirely cost-free debt collection service from Advocate, and kindly posted a review on our service.