Framing Payment from a Glazing Company

Payment of £9K for a 106-day overdue invoice has been recovered from a Liverpool based commercial glazing company. The firm has been trading for nearly 7 years and is building a reputation for innovative products and solutions. Their industry is dominated by a number of well-established market-leading competitors with the resource to invest, develop and refine products. Our debtor wants to specialise in habitable glass structures, although the main revenue currently comes from commercial glazing contracts. To challenge their competitors and secure a gap in the market, the debtor is having to invest heavily in Research and Development. Similarly, our client has been trading for a relatively short period of time in an equally niche sector within the accountancy arena. They specialise in claiming back tax relief on Research and Development costs. The commission is earned on the money saved or reclaimed. The debtor was able to benefit enormously from the savings and rebate obtained through our client’s expertise.

Debt CollectionTime Frame

Our client normally agrees to payment terms of less than 30 days because their biggest financial input is the hours worked by associates. With the economic downturn temporarily affecting the glazing industry, our client made an exception and extended payment terms by 3 months into the next financial quarter. The invoice subsequently remained outstanding for 2 financial quarters after being raised. Communicating through middle-level management, the debtor sought to alleviate our client’s concern by giving regular updates on a large payment expected from a completed glazing contract.

How each individual in the corporate hierarchy is tutored to deal with higher or lower-tiered counterparts in other organisations shapes the tone and time frame for resolving payment issues. A Credit Controller speaking to an opposing Director can sometimes be seen as an uneven playing field if the latter is inclined to assert their rank. It is a common misconception that directors speaking to directors is a quick cure for all ills. Our client’s initial approach was for their lower tiers to work up the debtor’s hierarchy. When this stalled, directors from both sides discussed a payment plan lasting several months before the debtor suddenly ceased communicating. With all avenues exhausted and the invoice more than 3 months overdue, Advocate Debt Recovery were instructed.

Clear Intentions

Once Advocate were instructed it took less than 24 hours to have an update with a firm commitment for payment. It emerged the glazing contract in question had not yet been completed. Our client had been pre-emptive and communicated they would still be willing to entertain a payment plan. As with all payment plans, we set the caveat of legal proceedings being a consequence of default and remind the debtor ahead of time. When the debtor suggested making payment over 7 weeks, we knew the client would be willing to accept. Our conversations indicated a shorter duration was achievable. There was also scope for another caveat stipulating that full payment of any remaining balance/instalments would be made on receipt of contract completion funds. With court and completion funds caveats in place, payment was successfully recovered in just 4 instalments with the final payment being received 23 days after Advocate’s instruction. With the benefit of hindsight, the client realised instructing Debt Advocate sooner rather than later would have been the quickest way to recover their £9K.