In the world of debt recovery, passing a debtor from one collections firm to another is frowned upon. Although there are many ways to present the same message, the consequences of non-payment are the same. When a potential client got in touch regarding a £23k debt two months overdue, they explained another debt recovery firm had failed to collect. The client had paid upfront for a service that ultimately left them worse off. Having supplied whitewood scaffolding boards to their new customer at a highly competitive price whilst eying up a larger contract, the timber merchant’s profit margin was being eroded through non-payment.
On either side of the first debt recovery firm, our client had completed their standard procedure of calls, emails, statements, copy invoices and letters – all with little to no response. Upon Advocate’s instruction, we could see the debtor had the means to pay but not the right motivation. Latest accounts showed the company was cash-rich, with profits regularly exceeding £250k on a modest turnover. A significant reduction in employees between the last two sets of published accounts suggested recovery of the debt was dependent on getting through to the right people at the right time.
Walking the Plank
Advocate quickly established a line of communication with the roofing firm’s Financial Controller, who, by their own admission, acknowledged a lack of resources in Accounts Payable. Like many firms in that corner of Britain, the number of vacancies to applicants vastly outstripped supply as employees were being tempted away to greener pastures. This was likely the cause of the debtor’s resource predicament. Despite our client’s efforts, the invoices were not showing as registered on the debtor’s system. Put simply, their AP software did not know the debt existed because current and former employees had not updated the ledger. Communication now continued with the AP Manager. We supplied copy invoices and to encourage goodwill, evidenced beyond doubt the debtor had received invoices and chasers on more than one occasion.
The sound of a debtor acknowledging liability and voicing a will to pay is always nice to hear, but it means nothing unless it precedes payment. The realisation and imminence of court proceedings hit home that Friday afternoon which is traditionally an early finish for the AP staff. Eager to show willingness, the AP manager made payment for their authorisation limit, equating to 40% of the debt, with a promise that sign-off for the balance would be cleared the following week. True to their word, the remaining 60% was received without fuss. The statutory late payment charges were also paid to the same schedule.
Since Advocate’s action, the client has been invited to formally tender for other contracts associated with the debtor and linked companies. Assuming sufficient reassurance is provided to avoid history repeating itself, the sky’s the limit for timber and scaffolding supply!