Someone owes us money
We have a client that we dealt with in the past, who recommended us to several people etc. He needed a product desperately and we advised him of the high costs of importing and he said "go ahead". We invoiced the client and, now, two months later, he says he will not pay. He claims to be going bankrupt. He claims that he will become a limited company in a couple months and not pay any of his personal debts. He claims that he will not have to pay us a penny if it goes to court. He owes us £700 at the moment. He has recently updated his website and appeared on television promoting his business. Has anyone had a similar experience? What should we do?
There are many legal things you can do in this situation, but a lawyer is best to advise on this, I am no lawyer? If I were in the same situation, as I have been, then I ask a friend to make a call to them asking for a demo of the product you imported from them, I would then arrive at the demo and say that belongs to me as you have not paid the bill, remove the item, then at least you have that back. In the future I would state in all transactions and on all invoices when selling items of this amount:- ”Title in the above items does not pass until all goods are paid for in full” That way if he does go under in any case he has no claim on the goods, if he then sells or disposes of them it is classed as theft and the police are brought in so even if he does go bankrupt he will be charged and some recompense, maybe not money, will be given! I hope that helps, but from experience if someone is going bankrupt there is not a lot you can do unless you can get in there before they go to court, by the way he won’t be able to transfer anything to a company unless someone else becomes a director as as a bankrupt you can’t be a director for a period of time, (3 – 12 months under the new laws I believe don’t quote me on that though)
Sounds like he is taking you for a ride. If he claims to be "going bankrupt" he wont be able to open a limited company…..so he is talking absolute rubbish. I personally would go straight for a CCJ (county court judgement) with anyone playing you around like that, they really aren’t hard to do, you can even apply on-line now. Generally you need is his agreement for you to buy the product at the price, and the delivery note showing receipt and you can’t really lose. Presumably you have a letter or email from him making the order? A solicitors “letter before action” may be of some use but quite frankly time is of the essence if you have let it get to 2 months with little action. The longer you leave it the less likely it is you will get your money. One thing to check before hand is if there are already existing CCJ’s. If so he is playing the system with loads of CCJ’s o/s enforcement may be an issue, and its something to bear in mind for next time, always credit check if you are offering credit. It doesn’t cost much to do and avoids selling to people with bad credit and getting into these sorts of problems. Don’t hang about though if he really is going to go bankrupt you will have to get in the creditor queue. If you dont want to do it yourself (and it is a bit of hassle first time), Lee or Sue from Lime One (who post on here) over a very reasonable service to deal with debt problems. I hope this is of help. Regards,
James Smith [i]Chartered Accountant[/i] www.jamesesmith.co.uk --------------------------- Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
There are people who run into financial difficulties through poor management or bad luck and there are out and out scoundrels and it looks like your man falls into the latter category.
In addition to what James has suggested I would recommend that you write him a final demand type letter summarizing the deal itself, his reaction when asked for payment and other circumstances that you have noticed. This may come in useful later on when the memory of dates and events starts to fade as there is the strong possibility that he has acted fraudulently if he purchased something from you knowing that he would not be in a position to pay for it.
I don’t suppose that the item is something that you can repossess is it ?
Ian Johnston - Factoring Solutions UK Ltd --- Independent Factoring Broker for growing SMEs --- Discover my free factoring negotiation service that tailors solutions and protects your UK business. --- Call me today on 01827 707 680
I know completely what you are going through and when people owe you a sum of money it can get very fustrating.
Personally we were owed just under £3000 and it took us 6 months to get it back after many angry exchanged over the phone and in person!. I finally landed upon this website which advises on the steps to take when chasing bad payers.
The structure I used was issue an invoice noting payment is over due and needs to be settled within 14 days. I recieved no payment so sent a 1st remonder which required payment within 7 days then when I still got no joy I sent a final reminder which required payment within 3 days or a 7% daily interst would be added from date of first due.
We still got no joy so threatened our customer with the proceedings of a statutory order whci was enough to make him pay. Take note that the interes we charged for a 6 month overdue payment was almost 5x that of the original debt so it pays to be patient and go through the proper proceedures.
This is the site im talking about and it goves you a breakdown of the order to send out letters and even gives you free letter templates to use, its excellent:
Hope that helps and good luck
Shropshire Garage Conversions
UK DIY Forum
Some good advice above. Just thought I’d add the following:
Send a final warning letter, requesting prompt payment, threatening to go down the small claims court route.
If you hear nothing, go to http://www.moneyclaim.gov.uk – it’ll cost you about £100 to make a case, but if you win, the defendant is required to pay it back.
Where possible, keep a record of all correspondance sent to the debtor, either letters, print-outs of e-mails, or a log of when you made phone calls. These will help your case.
Have you managed to get anywhere with this yet?
Darren DCI - Outsourced Credit Control www.debtchase.com
Clearly, he is a cowboy, so I vote you name and shame the arse!
I gave an interview to the Guardian about late paying customers earlier this year. I’d reccomend a read through, I think it sounds rather good, though I say so myself. http://www.guardian.co.uk/online/businesssolutions/story/0,12581,1176768,00.html Unfortunately you don’t get to see my gorgeous mug shot online, that only went out in print 😉 Regards James A4 Internet ltd http://www.a4internet.com 0845 108 0411