With an estimated 20% of start-ups failing in their first year and 60% failing within the first three years, the odds are stacked against entrepreneurs. Trading with a start-up can be risky. Suppliers like our client seek to mitigate the risks through reduced terms. In this debt recovery of £1.1K, terms of 7 days were agreed upon because the debtor had only been trading for four months. Having researched the debtor’s fledgling wholesale business, our client knew this was not the director’s first rodeo as they already ran an established group of companies specialising in factory outlet stores.
Price of Business
Having agreed to the lease of two London warehouses for the new wholesale venture, our client was instructed to produce a schedule of conditions for each site. In documenting the condition of a property prior to occupancy, both tenant and landlord have a benchmark from which to judge responsibility for future dilapidations and reinstatement costs. With a decade of experience behind them doing just that, our client commenced work. Once the schedules were completed and invoices raised in line with the quotation, our client expected payment within seven days. The new trading relationship our client had struck up started promisingly but hit the rocks when calls for payment went unanswered. Advocate were instructed to make the next move.
The Winning Play
On first contact with Advocate, the debtor sought a discount for a clerk arriving late. In reality, they had been delayed a couple of minutes due to impromptu protestors on the route. As an olive branch, the client agreed to reduce the invoice by 10%. The debtor’s next roll of his dice was to claim the debt was disputed, but when pushed for evidence, none could be provided. It was then claimed the schedules were not fit for purpose, along with a convoluted threat to report the client to trading standards for unspecified breaches. With nothing forthcoming to back up the allegations, the debtor changed tact and requested a payment plan. The phoney excuses on record gave little to no confidence a payment plan would be adhered to. Within hours of our final refusal, the debtor had a change of heart, stopped playing games and made full payment of the £1.1K along with statutory late payment charges. Suffice to say, our client will only trade with the debtor again on proforma terms, and even then, payment must be received prior to the clerk starting their journey.