With the number of cars on British roads now exceeding thirty-one million, it’s hard not to encounter at least one auto centre when taking a short drive through any town. Franchised auto centres have the backing of a brand name behind them, but what about the small independents? A critical expense for any new business is buying enough stock to get started for an independent auto centre, which means carrying a vast range of tyre sizes and brands to fit any car. It just so happens our client is one of the UK’s leading independent tyre distributors, and they are not averse to entering into stocking agreements with fledgling businesses. This £23k debt is an example of when a stocking agreement goes wrong.
Payments Stopped Being Made
The debtor in question opened their auto centre in Gloucestershire, receiving initial stock on a sale or return basis. When needed, the stock would be replenished. All was well for the first three months; then, the debtor ceased making payments. With no communication, our client had little option but to stop deliveries and refer the case to Advocate Commercial Debt Recovery. In the client’s mind, there had been regular replenishments and no stock returned, so there was no reason for payments to stop.
Excuses Started Being Made
Upon instruction, Advocate struck up a dialogue with the defaulting auto centre, who claimed to have been communicating issues to the regional account manager. The debtor claimed they had received fewer tyres than invoiced and that some replenishment stock had been the wrong size and therefore returned, but without being credited. Having used one of the better-regarded courier firms, our client was able to provide proof of delivery for each and every tyre. The debtor claimed the signatories were not members of staff or names that were familiar, something which was later conceded as untrue. They also claimed that only 20% of the tyres invoiced had been received and that the total debt should be no more than £6k. These issues were something that the regional account manager had previously addressed using PODs, albeit failing to communicate this to their Credit Control team before the debt collection instruction.
Payment Alignment
Sometimes, all it takes is presenting the same information in a different way to unlock the door to payment. And this was just one of those times. With PODs in hand and a new perspective on the facts presented, the auto centre conceded that a mixture of temporary staff and poor accounting practices had caused their confusion. These shortcomings cost the debtor £2k in statutory late payment charges on top of the £23k principal debt recovered four days after our instruction.