Our client, a London based Commercial Cleaning Company, was contracted to carry out daily cleaning services at an exclusive members-only gym in West London. For over three years, a good working relationship existed between both parties, despite the fact that cleaning services were always carried out on time, while payments were not always made within the agreed payment terms of 30 days.
At the point of our instruction, invoices dating back up to 6 months and totalling just under £5,000.00 remained unpaid. Furthermore, our client was fully aware that the debtor’s business was forced to close in March following the first Covid-19 lockdown, as their business had suffered the same fate and was also forced to close.
Our client was suffering from the same uncertainty and cash flow issues as their debtor, yet they practised forbearance and sought to remain in contact to resolve the issue. Unfortunately, the debtor completely ignored our client’s letters, emails and telephone calls. With no response to the offer of extended payment terms, a payment plan or even the request to discuss the matter by telephone, our client’s patience was exhausted. As a result, the creditor instructed Advocate Commercial Debt Recovery.
COVID is not an Excuse to Withhold Payment
Following the issue of a Notice by post and email advising the debtor of our client’s intention to issue Court proceedings to recover payment of the debt, Advocate received a response within two days. As expected, the debtor’s response was to cite the Covid-19 lockdown and the close of their business as the reason for non-payment.
We advised the debtor that the Government’s current guidelines were that businesses of all sizes should pay their invoices within the agreed payment terms or immediately if possible. The Government had taken unprecedented measures to ensure that companies were financially supported, and there was little doubt that the debtor had not already received the ongoing financial support available.
Payment plan agreement
We invited the debtor to put forward a payment proposal and received an offer to settle the debt in 12 monthly instalments. This was rejected, and the debtor finally agreed to our client’s ultimatum to pay the debt in 3 monthly instalments to prevent the issue of Court proceedings.
We administered the payment plan, and the debtor paid each instalment on time, with the funds being transferred to our client via a faster payment the same day.
We understand that our client has been requested to resume their service once the gym reopens. They are happy to do so, knowing that Advocate debt recovery is available to assist them should they encounter any future problems receiving payment.
While our objective will always be to recover full payment immediately, ultimately, if the debtor does not have the funds available, it may not be possible. Our objective then turns to achieve the best possible agreement for our client in the shortest possible time and then ensuring that the agreement is adhered to.
Payment plans can also be an excellent way to maintain a working relationship if you are interested in supplying the debtor again at some point in the future. You need to make sure that the agreement is on your terms and favourable to your business and not the debtors.