Our client, a Bristol-based Drilling Supplies Company received a fairly large order from a local Engineering Company. They had in the past received smaller orders from the same company, and although the invoices were always settled beyond terms, no major payment concerns existed. The goods were delivered on the date requested and an invoice in the sum of £6,324.60 was issued on 30-day payment terms as per the supplier’s terms and conditions of business.
The creditor commenced politely chasing for payment once the invoice terms were exceeded by 30 days. Initially, they received various excuses for non-payment, countered the excuses and continued to request payment. The creditor was then informed that they would only be paid when the debtor received payment from their end client. Further that they did not know when they would receive payment.
Our client finally ran out of patience when the same end client contacted them directly to enquire about ongoing maintenance requirements. Our client advised that the information requested would not be supplied until such time as the goods had been paid for. Our client was astonished when advised that payment in full was made to the Engineering Company within the agreed 30 days terms over four months ago.
The debtor did not try and use the same excuse once Advocate Debt Recovery was instructed. The debt was recovered and transferred to our client within two days. The late payment charges that make up our fee were included in the payment.
We will pay you when we get paid?
Is the excuse of we will pay you when we get paid a valid reason to withhold payment? Can you be sure that they have not already been paid? The answer to both questions is no! And it should not be your problem when your debtor receives payment or not. Unless you have entered into a written contract with a specific pay when paid term, you should be paid within the agreed payment terms of the invoice you have issued irrespective of whether or not your debtor has been paid.
Such contracts with pay when paid clauses should be avoided unless there is a transparent mechanism in place to notify you on when the other party receives payment. Often pay when paid is used as an excuse for withholding payment to the benefit of the debtor. They may have been paid and are using the funds on other contracts without your knowledge.
If you are faced with the “we will pay you when we get paid” excuse, don’t wait six months to take action. Even if the debtor has genuinely not been paid on time, their inability to manage their credit control and payment processes should not mean that you have to wait beyond terms to receive payment of your invoices.
It took the creditor less than 15 minutes to submit their debt recovery instruction to us. We commenced action the same day, and the matter was successfully resolved within 48 hours when we transferred the full invoice sum of £6,324.60 to our client’s bank account via a same day faster payment.