The creditor is a fast-growing clothing manufacturer and brand ambassador based in the East Midlands. They assist new clothing brands in concept and technology, design and development through to order management and production in the UK and the Far East. Established 6 years ago, they have gone from strength to strength, helping 100’s of new businesses along the way. With an internal credit controller and a 100% client satisfaction rate, getting invoices paid, even if some clients were a bit slow, had never been a problem.
When a client promised payment month after month and then ceased responding, the creditor decided it was time to look for a debt collection agency for help. After visiting Advocate’s website, the creditor contacted us with a few questions on how our serviced work. They were not sure how our service could be free of cost and suspected that there must be hidden charges. Understandably given the industry we operate in, this is a question we get asked a lot.
Is It Really Free?
The answer is yes, our service is completely free of cost to the creditor. Creditors are entitled under UK Late Payment Legislation to claim the costs of instructing a third party debt collection agency to recover payment of overdue commercial invoices. Once you instruct us, we claim our costs from the debtor on your behalf and add those costs to the total amount to be collected from the debtor. Once we collect payment, you receive the total invoice sums, and our costs have been paid by the debtor.
Upon receiving our client’s instruction, the collection charges were calculated and a Notice was issued to the debtor by post and email for the principal invoice sums and collection costs. On day three of our action we contacted the debtor by telephone, they advised that they would be making immediate payment that day. Another question we are often asked is what happens if they pay the invoices, but not Advocate’s costs? And that’s exactly what happened on this occasion. The debtor, in an attempt to evade the collection costs, paid the invoice sums only directly to the client. This is not uncommon, and all we ask in these circumstances is that the client notifies us that they have received payment. We will then continue to pursue the debtor exclusively for payment of our costs.
Late Payment Charges are Legally Enforceable
What we often hear from debtors is that they don’t claim late payment charges from their clients, so why should they have to pay late payment charges. Once we explain to a debtor that the collection costs are statutory charges claimed under late payment legislation and that they are legally enforceable in Court, the debtor will usually accept that the costs must be paid. In this case, the costs were paid the next day. Unfortunately, some debtors will simply not accept the charges and we will be forced to issue legal proceedings to recover payment of the costs increasing the total amount the debtor will eventually be ordered to pay by the Court.