Client defaulting on invoice
Discussion
I have a client who is due to pay us a not unsubstantial amount of money by Monday. We called him today to remind him that the invoice was payable Monday ( or our full fees would apply for late payment) He has said that there might be a problem and could he call us to discuss on Monday.
I credit checked this company ( 6 people) before dealing with them and they werent the best but we went ahead anyway. It seems that the director uses the company as his personal cash account. He also seems top think hes a little smarter than anyone else.
I have also spoken to a couple of other people familiar with this business and they have said that he might not be that great a payer.
For me I took a calculated risk of dealing with him and I just want to know where I stand if he starts making excuses on Monday. We have already extended payment terms for his company and he has been happy with the service received ( I took the liberty of getting him to confirm everything in writing) .
Im going to be subtle and give him a slight benefit of doubt if he needs another week or so, however If he tries to Bulls41T me then I would like to know where I stand.
I imagine sending him an official letter reminding him of the debt and giving him 7 days to pay is step one, followed by a solicitors letter.
However im not going to let this lie and have protected myself against this scenario throughout the process, would I have a good case to take him to court and if he didnt pay force him into bankruptcy ?
For the sake of 7k?......
I think I have the situation under control but as always, advice from the PH Massive gladly accepted....
I credit checked this company ( 6 people) before dealing with them and they werent the best but we went ahead anyway. It seems that the director uses the company as his personal cash account. He also seems top think hes a little smarter than anyone else.
I have also spoken to a couple of other people familiar with this business and they have said that he might not be that great a payer.
For me I took a calculated risk of dealing with him and I just want to know where I stand if he starts making excuses on Monday. We have already extended payment terms for his company and he has been happy with the service received ( I took the liberty of getting him to confirm everything in writing) .
Im going to be subtle and give him a slight benefit of doubt if he needs another week or so, however If he tries to Bulls41T me then I would like to know where I stand.
I imagine sending him an official letter reminding him of the debt and giving him 7 days to pay is step one, followed by a solicitors letter.
However im not going to let this lie and have protected myself against this scenario throughout the process, would I have a good case to take him to court and if he didnt pay force him into bankruptcy ?
For the sake of 7k?......
I think I have the situation under control but as always, advice from the PH Massive gladly accepted....
Past experience tells me a well executed personal visit might be worth more than a few lost hours. Who else does the company owe money to?
I'd get down there quick, first in is first to get paid. Even ask for security if he won't pay eg some desirable assets like cars & logbooks, laptops etc. If he's not available find out where he lives and visit there.
Don't leave it too late to lose out big time.....
I'd get down there quick, first in is first to get paid. Even ask for security if he won't pay eg some desirable assets like cars & logbooks, laptops etc. If he's not available find out where he lives and visit there.
Don't leave it too late to lose out big time.....
rsvmilly said:
I should try to keep things amicable for as long as possible. Otherwise he'll probably just sit back and wait until a court forces him to pay (or just before the court date, to avoid having to pay charges)
I find the "boys" shouldbe very "amicable" - on a first visit....its the second visit that isn't as amicable I can tell you.
Hmmmph. But if its the government that owes you money you are utterly f****d because if they decide not to pay there is no beating them.
obiwonkeyblokey said:
He has said that there might be a problem and could he call us to discuss on Monday.
Call him Monday morning and suggest that these things are better discussed face-to-face and that you would like to pop over at lunchtime for a working lunch to discuss matters.
Edit: And get him to pay for lunch as a show of good faith.
>> Edited by JonRB on Friday 8th April 22:18
Be prepared to consider taking a part payment now, with the balance to follow on an agreed (and rigid) schedule.
Coming from an agency background, we always had trouble with slow-paying clients, leaving us unable to pay suppliers. The Finance man was totally honest with suppliers ("I'm waiting a cheque from X, and as soon as it clears we will be able to pay your bill", even if the supplier wasn't part of X's supply chain - it was a simple list of priority payments, and as soon as the cash arrived he would start clearing the list). Suppliers were impressed with the honesty, and of course that he kept his promises.
Of course, this may not be the situation you have. If it is a short term cashflow problem at the customer's end, look to recover what you can now, ideally to at least cover your own costs on the job. If the guy is basically honest, what is the value to you of winding his company up? Would it not be better to work together? There may be future work available.
Play it by ear. And if you are not satisfied with his story, you can still consider winding up, or turning up with a van to 'recover' material not paid for.
Coming from an agency background, we always had trouble with slow-paying clients, leaving us unable to pay suppliers. The Finance man was totally honest with suppliers ("I'm waiting a cheque from X, and as soon as it clears we will be able to pay your bill", even if the supplier wasn't part of X's supply chain - it was a simple list of priority payments, and as soon as the cash arrived he would start clearing the list). Suppliers were impressed with the honesty, and of course that he kept his promises.
Of course, this may not be the situation you have. If it is a short term cashflow problem at the customer's end, look to recover what you can now, ideally to at least cover your own costs on the job. If the guy is basically honest, what is the value to you of winding his company up? Would it not be better to work together? There may be future work available.
Play it by ear. And if you are not satisfied with his story, you can still consider winding up, or turning up with a van to 'recover' material not paid for.
Agree with HiRich. When I've been in this situation in the past I've always settled for part payments, some money now is better than no money at all. ONly had to resort to winding up orders a couple of times in 10 years of business and have ended up with less than 5Ks worth of bad debts in 10 years and all of these are beacuse companies have gone bust. The last one was a mere £675, not really worth bothering about, in the time it takes progress some of these small debts you'd be better of securing new business!
Remember you can claim the VAT back on a bad debt.
davidy
Remember you can claim the VAT back on a bad debt.
davidy
I'm not a great fan of taking some money now and agreeing a payment schedule for the rest. If the company is in financial difficulty they may go down the pan and you'll be behind the rest of the world in the food chain.
My advice would be to consider whether there is a prospect of repeat business - if so, you may want to take a fairly concilitary approach.
Is this a very established business, is it likely that the director will pull the plug on the business? If you think this is likely you need to get a statutory demand for the money in ASAP. You might want to think about issuing court proceedings - hoping that they don't respond and applying for a default judgment. You could consider "discounting" the invoice and issuing at under £5k to keep it in small claims (lower fees, no award of costs) BUT think carefully about court action if there is any chance that they might counterclaim - this is not an amount worth getting into contested proceedings about - have you fulfilled the contract in its entirety and can you demonstrate that?
Obi, I'm not very far away from you and the law firm that I work for has a very efficient business debt recovery unit who can do this kind of thing at good rates. PM me if you want a contact.
Edited to add: I'm assuming that this is a limited company with very little assets rather than an individual?
>> Edited by Piglet on Friday 15th April 09:22
My advice would be to consider whether there is a prospect of repeat business - if so, you may want to take a fairly concilitary approach.
Is this a very established business, is it likely that the director will pull the plug on the business? If you think this is likely you need to get a statutory demand for the money in ASAP. You might want to think about issuing court proceedings - hoping that they don't respond and applying for a default judgment. You could consider "discounting" the invoice and issuing at under £5k to keep it in small claims (lower fees, no award of costs) BUT think carefully about court action if there is any chance that they might counterclaim - this is not an amount worth getting into contested proceedings about - have you fulfilled the contract in its entirety and can you demonstrate that?
Obi, I'm not very far away from you and the law firm that I work for has a very efficient business debt recovery unit who can do this kind of thing at good rates. PM me if you want a contact.
Edited to add: I'm assuming that this is a limited company with very little assets rather than an individual?
>> Edited by Piglet on Friday 15th April 09:22
I've got one of these at the moment - owes me £7,000. He's in for a mighty shock this morning. He has been avoiding me for a while, not taking calls or responding to emails. I found out recently that he belongs to an executive business networking club, so I called the club and have arranged to attend today as a guest, and selflessly give a 15 minute speech on public relations. I can't wait to see his face when I turn up!
Needless to say, the speech may well include a piece on the need for trust and good ethics in business and my level of subtlety will wholly depend on how quickly he goes for his cheque book!
Needless to say, the speech may well include a piece on the need for trust and good ethics in business and my level of subtlety will wholly depend on how quickly he goes for his cheque book!
Mon Ami Mate said:
I've got one of these at the moment - owes me £7,000. He's in for a mighty shock this morning. He has been avoiding me for a while, not taking calls or responding to emails. I found out recently that he belongs to an executive business networking club, so I called the club and have arranged to attend today as a guest, and selflessly give a 15 minute speech on public relations. I can't wait to see his face when I turn up!
Needless to say, the speech may well include a piece on the need for trust and good ethics in business and my level of subtlety will wholly depend on how quickly he goes for his cheque book!
Well, that was a major success. The defaulting client went crimson when I walked in and paid up on the spot. My opening gambit was "are you going to pay up or am I going to make this a 15 minute speech on business ethics?"
I spoke about my business for a quarter of an hour, collected a pile of business cards from local business owners and I had a fantastic lunch and lashings of Rioja, all at someone else's expense. Why can't every day be like this...?
Mon Ami Mate said:
I've got one of these at the moment - owes me £7,000. He's in for a mighty shock this morning. He has been avoiding me for a while, not taking calls or responding to emails. I found out recently that he belongs to an executive business networking club, so I called the club and have arranged to attend today as a guest, and selflessly give a 15 minute speech on public relations. I can't wait to see his face when I turn up!
Needless to say, the speech may well include a piece on the need for trust and good ethics in business and my level of subtlety will wholly depend on how quickly he goes for his cheque book!
Well, that was a major success. The defaulting client went crimson when I walked in and paid up on the spot. My opening gambit was "are you going to pay up or am I going to make this a 15 minute speech on business ethics?"
I spoke about my business for a quarter of an hour, collected a pile of business cards from local business owners and I had a fantastic lunch and lashings of Rioja, all at someone else's expense. Why can't every day be like this...?
Class! A printer I used to know in London said he'd often hire 7 midgets, dressed as the 7 Dwarves to follow lagging debtors around all day until they paid up. Worked too by all accounts!!
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