What should you do if a client or customer fails to make payment for goods that you have supplied?
If you’ve ever had to chase a client or customer to make payment for goods that you have supplied, you’ll know just how frustrating and time-consuming it can be.
In some cases, repeated reminders seem to make no difference whatsoever and payment for the goods or service that you have provided is still not forthcoming.
If this happens to you, don’t be afraid to tackle the situation head-on. Many decades in debt recovery have taught me that the quicker you act, the better your chance of receiving payment. It is important, however, that you are familiar with the steps that you should take.
To help show you what you should do, I’ve put together a brief case study, based on a matter that I recently dealt with for a client.
The problem: A limited company supplied goods totalling £125,000 to another limited company. The goods were supplied over a period of time but were not paid for within the terms of the contract.
The solution: Thankfully the client had followed our previous advice and had put in place all the relevant contractual documents to prove their claim. This included:
- Terms and conditions of business
- Order forms
- Delivery notes
- Detailed invoices
- Chase up letters and emails
This meant that the goods supplied were all subject to the contractual documents and our client’s terms and conditions of business.
These signed documents were placed into date order which set out clearly the contract itself between the parties and proof of the goods supplied and being received by the debtor company.
A pre-action protocol (PAP) letter was issued together with all supporting documents upon the debtor company.
Within the PAP letter a demand for money was made. We also referred the debtor company to a specific clause within the terms and conditions of business where if payment was not made, our client had a retention of title claim over the goods. Effectively this meant that ownership of the goods supplied stayed with the client until paid for. If payment was not made, the goods could be taken back by our client.
As well as the demand for monies due, an additional claim was made for interest, compensation, and costs under the late payment legislation.
The outcome: The debtor company fully complied with the pre-action protocol letter and made payment of the full claim within the statutory period of 14 days.
Value to client: Because the client had followed our advice in preparing contractual documents and introducing robust procedures, we were able to respond quickly, implementing a pragmatic approach which resulted in a swift and cost-effective resolution. The approach ensured court proceedings were avoided and the service of a Statutory Demand was not necessary.
As I mentioned earlier, time is very much of the essence when it comes to debt recovery, along with clear contractual documents that protect the interests of your business.
If you need help, either to recover monies for goods or services supplied or to create or update your terms and conditions of business or other contractual documents, please don’t hesitate to get in touch emailing firstname.lastname@example.org or alternatively by phoning 0161 929 8494.
Richard Anderson, Head of Debt Recovery