Expert Collections – Success Story and The Importance of Terms & Conditions
Expert Collections had a recent instruction from a recruitment company in South Yorkshire who had unpaid invoices owed by a local PLC. The invoices were for providing temporary workers to the company who were involved in the manufacturing of building and construction products.
The invoices totalled around £15,000 and were approaching a year overdue. The recruitment company was struggling to collect the invoices and this was causing considerable issues with the cash flow of the business. The knock-on effect was that our client was having issues paying their own suppliers and this was a threat to the very existence of their business.
These issues were further compounded by the fact that our client had an arrangement with a factoring company and these invoices had already been removed from their credit facility. This meant that they were incurring penalty charges from the finance provider whilst the monies went unpaid.
The Managing Director of our client had a holiday booked and decided to contact us in the hope the issues could be resolved and the invoices collected while they were away.
We gathered as much information as possible relating to the history of the matter as well as obtaining copies of the contract, timesheets, invoices and any other supporting documentation.
Gathering this information made us aware that the invoices were unpaid as the PLC were claiming they were in dispute for various reasons.
In situations like this where we are aware there is a potential issue we always endeavour to collect as much information as possible. By doing this it means that we can tailor the initial response to include the supporting documentation. Our experience tells us this minimises the chances of the debtor raising any spurious disputes, such as requesting copy invoices, as the information is sent with the demand letter itself.
On receipt of our demand letter the debtor contacted us to reaffirm that the invoices were in dispute. The job of a competent outsourced debt collection agency is to drill down and get to the bottom of the disputes in order to resolve them.
In this instance the debtor raised numerous disputes as to why they wouldn’t pay the invoices. The queries raised included:
- The legal entity of the company we were chasing was incorrect.
- Claims there were pricing issues with the workers supplied.
- Disputes around whether relevant Purchase Orders had been raised.
- Claiming that some of the invoices had already been paid.
By addressing and countering these purported disputes our agent was able to get confirmation from the debtor that all the queries had been addressed.
The key part of getting these issues resolved was the fact our client had quite a strong set of Terms and Conditions that had been agreed by the debtor company at the start of the relationship. We were able to reference the Terms and Conditions to dismiss the claims that were being made by the debtor which appear to have been raised simply to delay payment.
The importance of correctly formed Terms & Conditions that specifies the nature of the relationship between a supplier and their customer can be the difference in getting paid for an order or not.
Many businesses do not have any Terms & Conditions in place and even if they do, they can often be inadequate in terms of offering protection to their business.
In most business transactions matters will run smoothly but, on the occasion where there is an issue or disagreement regarding an order, then where do you turn for clarity on the correct legal position? By specifying the responsibilities of both parties and payment terms for any work that is done saves time and hassle further down the line should there be a dispute.
Situations sometimes arise where there is a dispute over payment terms for completed work but if you can provide a document that shows agreement to payment within 30 days, for example, then it helps to resolve such issues. By specifying what the provision is for matters such as delivery times and consequential loss means your business is protected in the event something goes wrong with an order.
Not only do Terms & Conditions offer protection to the supplier but they can also give confidence to the client that they know what their expectations are when placing an order with your business.
The outcome of this was that the payment our client was expecting was paid in full and the cost of the collection was billed to the debtor using late payment legislation.
The money was all paid across to our client by the time they returned from holiday, much to their delight.
Having Terms & Conditions in place should be a fundamental part of any business offering the supply of goods or services, in particular where the supply is on credit.
Gary Ainley ACICM, Director