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Statutory demand secures recovery of £13,320 for an electrical firm

County Electrical Services is family run business supplying commercial, domestic and industrial electrical installation and maintenance services throughout the West of England.

The challenge

County Electrical had been contracted by a facilities management company to carry out electrical rewires as part of the complete refurbishment of council housing stock with the work expected to last for 8 months. Initial payments were made on time and as agreed but soon slowed and by month four an outstanding balance had built up. County Electrical approached the situation in the correct manner by writing to and meeting with their customer to express their concerns and request payment as agreed. Promises of payment were made but not fulfilled and after giving notice and completing all of the individual projects they had started, County withdrew their services six months in to the contract. The outstanding balance included labour and materials costs and amounted to £13,320.

The recovery process

It was clear from the information supplied in our client’s instruction that the debtor had adopted an aggressive and dismissive approach to the situation in order to avoid payment. This was confirmed when we received no response to an Initial Demand letter or Final Demand letter and then made telephone contact with the Managing Director. It was only at this stage after failing to respond to our earlier requests to make contact, that the company raised a dispute. They claimed that County Electrical had not certified or registered many of the electrical installations with Building Control leading to them bringing in another contractor at additional expense.

As expected County Electrical were able to supply information that enabled us to refute the dispute claim. We presented the debtor with evidence supplied by NAPIT, County Electrical’s trade governing body and the councils for whom the worked had been carried out. The information presented showed that all of the installations had been certified correctly and on time, and Building Regulations Part P certificates had been issued by NAPIT and received by the councils.

The debtor was given a further 7 days to make payment and informed that a statutory demand would be issued at the end of the 7 day period and insolvency proceedings would follow. The debtor did not respond and a statutory demand was immediately served. We received a call from the company’s finance director 4 days later informing us that a bank transfer had been made to clear the outstanding balance including interest and costs.

The result

Issuing a statutory demand is not a step to be taken lightly and should only be considered in appropriate circumstances, however, as this case shows it can be a very powerful weapon in recovering a commercial debt.