PACT Scheme: Chris Hawthorn

After falling victim to late payments in a previous company, this entrepreneur is on a mission to help small businesses get what they're owed

Name: Chris Hawthorn
Company Name: PACT (Please Abide Contract Terms) Scheme
Location: East of England
Date Launched: 21/01/16
No. of employees: 5

Tell us what your business does:

The PACT Scheme exists to remove the burden of late payments for small and medium sized businesses.

It helps increase the chances of businesses recovering debts while maintaining customer relationships using pre-agreed procedures and implementing genuine repercussions for late-payers.

The scheme gives small business owners complete power, allowing them to decide exactly when to upload details of an overdue invoice.

The unique part for PACT members are the genuine repercussions that are available to enforce as they see fit.
Members upload details of the debt and a sequence of automated emails are sent to their customer over a seven day term. These emails outline the repercussions for non-payment.

Details of the debt will be released to leading credit reference agencies and also be made visible on a free search engine exposing defaulting companies —

Members don’t have to exercise this option, PACT is simply empowering small businesses by affording them the ability to use genuine repercussions to encourage prompt payment.

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Where did the idea for your business come from?

I joined a property marketing agency in 2005 and after developing a thorough understanding of the market, set up my own business which was successful for a number of years.

However, late payments eventually had an immense effect on the company.

I had to invest personal savings to stay afloat which then damaged my own relationships as I was paying my own suppliers late.

I was unable to invest in important marketing activities to create growth, lost productivity chasing late debts and was hit by an immense amount of stress. This lead to me becoming extremely passionate about debt management, particularly the impact this often has on small and medium sized businesses.

How did you know there was a market for it?

Adding to my own experience, there is research showing British small and medium-sized enterprises are owed more than £500bn in outstanding invoices, an increase of more than 70% in two years.

The average late payment burden shouldered by small businesses stands at £31,901, with these businesses spending up to an additional £677 a month on their overheads chasing late payments.

It is no surprise that surveys have shown that 60% of companies have been negatively impacted by late payments. This is why I set up the business and the reason why we exist.

What were you doing before starting up?

I was working on a passion project called SafeKnight, which is an app to help keep people safe when they’re on nights out. I’ve been trying to focus on doing things that will make a positive impact in some way, hence the direction of SafeKnight and PACT.

Have you always wanted to run your own business?

Definitely. I feel like I have too many ideas and aspirations that would be very difficult to achieve working for somebody else.

They’re not always good, but I definitely learn something important every time I invest my time and energy, and they usually lead to something bigger and better.

PACT is the product of 10 years of internal problem solving, bad ideas, mistakes and dead ends. That is why I’m so positive about the final solution; it’s not a ‘flash in the pan’ idea, it’s taken years of passion to get it right.

How did you raise the money?

I have two partners in the business, who have invested heavily in making the PACT Scheme a reality.

They are not silent partners either, they’ve both contributed to making PACT what it is today, and are both passionate about helping small businesses get paid quicker.

Describe your business model and how you make money:

PACT scheme fees are £10 per month or £89 per annum (plus VAT) and clients receive instant access to the PACT Customer Dashboard once registered.

Here clients can record unlimited late payments and instantly start managing their company cash flow.

Members are sent the PACT Scheme logo for adding to quotes, invoices and other related correspondence as a preventative tool.

The PACT Scheme first uses mediation to recover clients’ debts. When debtors fail to meet their contractual obligations and ignore multiple reminders, the creditor can then choose to release their company name and website address to, along with the debt amount and due date.

Partnerships are also in place with leading credit reference agencies if the creditor wishes to share non-payers’ information to drop their credit score, as a last resort.

What challenges have you faced and how have you overcome them?

The biggest challenge has been questioning the status quo. Late payments seem to be embedded into our culture and small businesses are at the mercy of the big companies who hold all the cards.

When you consider the amount of money owed, the number of businesses and personal lives affected, and the impact late payments are having on the economy, the concept of a scheme such as PACT would not be questioned.

Talking about the problem makes some business owners feel vulnerable as they prefer to think, “It will never happen to me.”

We’ve been amazed by the number of people who don’t have a contingency plan for when late-payers becoming non-payers. This has been the main challenge we’ve faced.

What was your first big breakthrough?

The first big breakthrough was a conversation with our eventual legal team. Not only did they confirm everything we wanted to achieve was perfectly acceptable, they genuinely couldn’t believe it hadn’t been done before.

When they started reeling off a list of their clients who would benefit from the scheme, I knew we were onto something immensely positive.

What advice would you give to budding entrepreneurs?

Follow your dreams but don’t ever forget about your customer. Every decision should include the question, “How will this help my users?”

Also, never underestimate the time and money needed to get your idea in front of people. I’m certain there’s a vast number of incredible inventions and concepts out there that just need a helping hand getting into the mainstream.

Where do you want to be in five years’ time?

I want to be involved in the PACT Scheme, and still helping make it into a globally recognised brand. If I could do that and have more hours in my day to spend with my baby daughter, I will be a very happy man.


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