I have copied below an email I recently sent to a debtor company that owed my client around £6,500. I am removing any names to protect the innocent and the not so innocent and I shall refer to the two businesses as Debtor Ltd and Creditor Ltd, the latter being my client (I don’t believe either of these names is taken by a real business but please accept my apologies if my searches have falsely indicated this).
Firstly, the email I sent to Debtor Ltd:
Please stop trying to dictate what we do and by when. You are no longer in a position to demand this.
We offered on more than one occasion to stop proceedings if you paid the lesser sum by a certain date. You did nothing.
You then received court papers which required a response within 14 days. You did nothing.
The upshot is that now:
• Your company has a CCJ against it;
• Experian (and, no doubt, the other credit reference bureaux) have picked this up and your credit rating has been damaged;
• There will doubtless be further deleterious effects of this CCJ as your customers, suppliers, financiers and others get to learn of it;
• Probably your staff will find themselves fielding calls from the above asking what is happening.
Our records indicate that you owe Creditor £6,xxx not the £5,xxx you have stated. I can commit the staff at Creditor to working with you to resolve this difference and to repaying any amounts determined not to be owed by you but I suggest you now clear the full amount of the judgment (£6,yyy with the costs) so that the CCJ can be fully removed and any further damage limited.
If you are unsure what to do I recommend you seek legal advice but exhorting us to action is inappropriate now.
Debtor Ltd had run up credit with my client, Creditor Ltd, whose terms of business are 30 days net. They had requested and received an extension to 5 weeks credit but still were not paying on time. When challenged and asked to bring the account within terms their response was that they would pay us on their terms only, notwithstanding the agreement they had reached with Creditor Ltd:
Our invoices are paid on a weekly basis, and a payment is made every Friday. These are our payment terms and this is how we will continue to pay the outstanding invoices.
They then proceeded to pay irregularly and amounts determined by them and not in agreement with Creditor.
So, we threatened legal action if they did not clear the balance. They disputed the total amount owed but acknowledged a debt of around 80% of the total but steadfastly refused to clear even this amount within an acceptable timeframe. We proceeded to issue a claim in court and, as the email points out, for some inexplicable reason they failed to respond at all. We obtained summary judgment thereby creating a County Court Judgment against them for the full amount we claimed they owe plus costs, expenses and interest.
Debtor Ltd has now paid the full amount of the judgment and will need to prove to Creditor Ltd any differences. In addition, they have suffered potentially serious damage to their reputation with customers, suppliers, staff and others which will take them some time and management effort to recover.
Despite my many years working in debt collection I can still be surprised by the naivety of many companies. Do not fall into the trap of believing that because a customer is paying you something this robs you of your right to enforce your terms of business.
If you are trying to recover money owed to you or you owe money and may be struggling to pay on time then speak to us – we cannot make all your woes disappear but we can often take one load off your mind.