In this debt recovery, our client is a Shropshire-based IT company on the cusp of a merger. Admittedly, their Credit Control department has been under-resourced for the last 5 of their 13 years in business, which prompted a flurry of debt referrals to Advocate in preparation for the merger. This particular debt recovery requires a special mention. The debt pertained to an account our client won shortly after incorporation. The debtor had always been slow to pay but boasted a high credit rating, allowing the client to obtain credit insurance easily.
Double Standards
Upon instructing Advocate, the seven invoices spanned 90 to 1,000 days overdue, meaning they had carried some of the £26k debt for three years! Until the merger, which presented the new entity with a conflict of interest, our client had been willing to tolerate late payment in view of the prestige of having such a customer on board. The merger meant the debtor was no longer a flagship trading account. Having discussed the case with the client before taking it on, Advocate was surprised by the debtor’s primary nature of business. Listed as conducting business and domestic software development, the debtor specialises in streamlining procurement and payment processes. The irony of a firm singing the virtues of paying on time but unable to do so themselves was not lost on us!
Consistency and Persistence
In recent months, the Accounts Payable (AP) team has been unable to provide a payment date or convey any useful information to our client. Upon instruction, Advocate warned the Surrey-based debtor that a County Court Judgement would be sought if they did not pay. For a company priding itself on helping others pay on time, a CCJ would publicly conflict with what they so actively preach. AP tried to claim the invoices were not on the system and had never been received. They even tried to convince us they had never traded with our client. No matter how many different people we communicated with in AP, no one presented anything as evidence of a genuine dispute or provided a justifiable reason for late payment.
Keeping it Simple
With nowhere left to hide and instead of simply paying the £26k plus £4k of statutory late payment charges, Advocate was told to await contact from a third party. The debtor decided to appoint solicitors operating in Eastern Europe to liaise with Advocate. Unfortunately, their solicitors delayed making contact for two days because of the phone lines and servers going down. As streamlining goes, this was undoubtedly not on brand! Once contact was established, our Slavic counterparts were most agreeable and proposed to pay 50% by close of business and the balance within seven days. Our client was instantly agreeable, and we received payment of their £26k and our fees within 11 days of instruction. For Advocate, this was another successful debt recovery, but for our client, this was more about keeping the merger on track.