Recovering Bad Debt

Just thought I'd put this out there in the hopes that anyone has some advice.

One of our clients has not paid their invoices since late 2008. We have continued to provide services due to the good relationship we have had with them over the years, but the invoices keep piling up and not being cleared.

We have heard on the grapevine that this company has not been paying their invoices to various other large corporations; some are owed money to the tune of several hundreds of thousands and are getting prepared to take the company to court.

We have up till now been insistent but passive in our chasing, but now need to step it up a notch in order to recover the money owed. Since we have not had bad debt in the company before, we are unsure of what exactly is the best way to proceed. Are there any standard templates for legal letters we can begin sending over prior to start actual legal proceedings? Has anyone else had experience taking the legal route with recovering money from debtors?

As I'm sort of been put in charge of this process, any ideas or suggestions would be welcome. The more I know the better prepared, or whatever it is they say.

Cheers

First thing to do is to stop work. Don't do a thing for them until they pay.

Not sure how to approach getting the money back, but don't give any more away until this is sorted.

Cheers Dave. Although it's rather obvious, I know that stopping work outright might not be the first thing some companies think of. I've already mentioned to our CEO that we need to stop doing anything for them ASAP.

Tiswas, some colleagues in the office seem to think that if the company goes into administration, debtors with smaller claims are more likely to be the first to receive any money and the larger debtors simply have to tough it out. Any idea if this is true (or partially true)?

As a company do you have a law firm which you use? I would contact them regarding the case and they can have the notes/ letters put together and do the leg work for you.

I would just try and get your case across before anyone else if they already owe other companies a lot of money, because if the company does go into administation it will be very hard to get your money back if at all.

izgard, a lot of people will be in line to get paid before your company if they go into liquidation. It normally goes something like:

• fees and expenses of the liquidator,
  
• court costs and taxes,
  
• employees wages,
  
• redundancy costs.
  Only after all of these are settled will the liquidator look to apportion the remaining cash to the creditors deemed most urgent or longest outstanding.
  

Basically as said previously, stop providing any services to them and seek legal advice.
Any monies owed should be provided for on your balance sheet and expensed in the P&L.

Tiswas, some colleagues in the office seem to think that if the company goes into administration, debtors with smaller claims are more likely to be the first to receive any money and the larger debtors simply have to tough it out. Any idea if this is true (or partially true)?

No, i don't think this is true. it's generally the one who shouts the loudest who gets paid first, as a basic rule.

Go in heavy, i have been told, is the only way. Hit them with a demand for full settlement immediately, lawyers, the works. threaten to wind their company up. Be sure that this is what plenty of other people will do to them very shortly, and if you sit back and let them get on with it, you'll be forgotten about as the smallest threat.

That's true. Forgot to mention creditors with security secured on all/certain assets will get paid first, e.g. they may have a bank loan secured on the remaining stock.
If they do go into liquidation you'll receive a dossier from the liquidator detailing the assets held by the co. and whose to be paid before you see any dorrah.

Thank you for the advice guys. Seems the general consensus is to get a solicitor on the case right away.

Cheers

Anyone have experience of taking a non paying company to court? Is it easy? I am an individual so can't afford legal help.

I have an invoice that is a couple of months overdue but I want to get the company to pay up soon.

I had a company go bust on me once before and I ended up with nothing so I want to push them before they completely run out of money.

use https://www.moneyclaim.gov.uk/web/mcol/welcome

surely some nice helpful east end geezers might be able to assist

Go here for guidance: The Consumer Forums.

Buy "Small Claims Procedure - A Practical Guide".

I used moneyclaim on an estate agent and he just kept ignoring them, eventually I just kept the commission on the house they were selling for me which cleared what the bastard owed me in rent plus the costs of using moneyclaim in the first place.

No help but I am now vex again thinking of the robbing cunt

Winning in court would only be the first step - next would be appointing bailiffs to enforce.

Oh right - I would have to appoint bailiffs. What a pain.

I hope the final reminder letter will bump me to the top of their list of people they owe.

I assume that if you are running a company with cash flow issues the permanent staff, rent and utilities get paid first - freelancers can wait if they don't shout loud enough...?

Go here for guidance: The Consumer Forums.

Buy "Small Claims Procedure - A Practical Guide".

Thanks!

surely some nice helpful east end geezers might be able to assist

I had considered getting a massive biker guy from work to accompany me to their office.

I had considered getting a massive biker guy from work to accompany me to their office.
Why, do you need a dance partner?

ve ry fun ny

You can put a charge on their property. So they cannot sell their house until they pay you back.

This site seems quite useful
http://www.howtotakesomeonetocourt.info/

So, the firm that owed me money is gradually paying me week by week. I have been looking into "The late payment of commercial debts (interest) Act 1998"

Can I as an individual use this to put interest on top of what they owe me? The act is described as being for small companies to claim from big companies but I'm a one man band.

We there any penalty charges outlined when you sent the first invoice or when any contract was signed?

If so, yes you can charge.

Universal - if you are VAT registered, you can claim the VAT back on the bad debt (once the debt is over 6 months old). Might go some way to ease the pain...