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yusefkerr
8th March 2013, 18:18
Hi, I've been waiting for around 6 months to get paid for a job. The client has recently said that they still intend to pay, but this has been dragging out by degrees. Over 3 weeks ago, I said I would look to charge them interest if the invoices in question weren't paid within 14 days.

There is government legislation supporting this action, I'm entitled to charge 8.5% interest on overdue payments. See here for more info:
http://www.bis.gov.uk/files/file37581.pdf
I know this might burn a bridge, but I hate feeling like a soft touch and 6 months is a long time.

Anyway, I'm just about to send them something asking for interest on top of the existing balance. My problem is that I don't know what format this should take. Should it be an invoice and if so, what should it say? If not an invoice, how should I ask for the interest?

My instinct is to send a new numbered invoice showing only a figure for the 6-months of interest, and underneath put a note explaining how the figure was calculated and a reminder of the full outstanding balance.

Does anyone have any advice on this, or a better idea of how to approach it?

northernladuk
8th March 2013, 20:54
Have a look at payontime.co.uk for the best process. It is certainly an idea but see if there is anything you haven't tried on there. Also look up dunning and try that.

Jessica@WhiteFieldTax
8th March 2013, 21:33
Yes; do a separate invoice with narrative. No vat on invoice.

Also remember you can add on statutory recovery costs - its not a lot, £40 on up to £1K, £70 on up to £10k.

psychocandy
11th March 2013, 11:17
6 months! I think I would have escalated things before then....

yusefkerr
11th March 2013, 16:33
Thanks for your help, advice and support, the client is now saying that they "should be in a position to pay the balance by mid April", so I think I'm going to send them the statement of interest and also offer to waive the interest if they pay within 7 days.

If I send them an invoice showing the interest due up to today (11th March), when should I update the amount and how should this be done? For example, should I invoice them for 31 days more interest on 11th April?

My big concern is that they're going to wind-up the business and I won't receive anything. Does this sound likely for an 18-month old start-up employing around 10 people, or am I being paranoid?

northernladuk
11th March 2013, 16:43
Thanks for your help, advice and support, the client is now saying that they "should be in a position to pay the balance by mid April", so I think I'm going to send them the statement of interest and also offer to waive the interest if they pay within 7 days.

If I send them an invoice showing the interest due up to today (11th March), when should I update the amount and how should this be done? For example, should I invoice them for 31 days more interest on 11th April?

My big concern is that they're going to wind-up the business and I won't receive anything. Does this sound likely for an 18-month old start-up employing around 10 people, or am I being paranoid?

Holy crap! I would be more than paranoid in that situation. I think I would be bricking it. I hope it isn't a lot. I don't think there is any hard figures about startups failing but a quick search shows a few people putting it at around the 80% mark don't make it to the end of year 2.

I would certainly be thinking about forgetting the interest added option, or at least carry it on but don't put any faith in it. If you can, skip that and go straight for the legal option. I am thinking if they have cash flow problems they will be paying prioirty clients first and you are not one of them at the moment. If there is a legal case hanging over them it might push you in to the priority list... if everyone else hasn't already had that idea.

Time to go in big and hard me thinks.. How, I don't know, but start investigating it.
Safe collections post on here and haven't appeared on this thread yet but I would certainly be thinking about giving them, or someone similar a call. Home (http://www.safe-collections.com/)

Edit : If SafeCollections do read this thread you might wanna look at your meta tags or whatever it is that says 'Home' lol

yusefkerr
11th March 2013, 19:36
Well, thanks again Northernladuk. I've just issued them with a notice of interest due. However, I'm not going to wait and I now just want the fastest way of retrieving the original balance.

They've said that they do intend to pay "as soon as [they] are able", but they seem to be relying on current investment negotiations/April VAT return to pay me. I am indeed worried that they'll go under before I get paid.

What are the pros/cons between small claims and a debt-collection service? Which is likely to be faster? My instinct is to go through the small-claims court but there seems to be a cutoff at £5000, after which the process changes. They owe me just slightly more than that based on a number of different invoices.

Is there any point in limiting my claim to £5000 in an effort to push it through faster?

northernladuk
11th March 2013, 20:04
Don't want to be rude but f I was owed over 5k by a company I think is about to go under I would be too busy on the phone taking advice from specialists to be posting gormless questions on a free forum.

yusefkerr
11th March 2013, 20:18
I don't think there was anything gormless about my question. Today is the first day I've actually got them to admit there might be something wrong with their finances and I'm following things up through Citizens Advice as well, to try and find a pro-bono lawyer.

Does anyone else have any advice?

Safe Collections
12th March 2013, 10:33
I don't think there was anything gormless about my question. Today is the first day I've actually got them to admit there might be something wrong with their finances and I'm following things up through Citizens Advice as well, to try and find a pro-bono lawyer.

Does anyone else have any advice?

So to clarify, you have invoices outstanding totalling over £5k from roughly six months ago. The client has only just confirmed they have cash flow "issues" and are "hoping" to pay you in another 30 days?

You need to start being realistic. The chances of you ever receiving your funds are declining every day that you wait. We can guarantee you that other creditors are getting paid, either because they are essential to the debtors business or because they are taking strong recovery action.

If this company had any serious intention of paying you, they would have done so by now!

We strongly recommend that you read our piece on Contractor "how contractors can get paid if all else fails (http://www.contractoruk.com/limited_companies/how_contractors_can_get_paid_if_all_else_fails.htm l)" this should answer a majority of your questions on how to move forward.

But please, whatever you do, don't delay any longer.

psychocandy
12th March 2013, 11:57
Thanks for your help, advice and support, the client is now saying that they "should be in a position to pay the balance by mid April", so I think I'm going to send them the statement of interest and also offer to waive the interest if they pay within 7 days.

If I send them an invoice showing the interest due up to today (11th March), when should I update the amount and how should this be done? For example, should I invoice them for 31 days more interest on 11th April?

My big concern is that they're going to wind-up the business and I won't receive anything. Does this sound likely for an 18-month old start-up employing around 10 people, or am I being paranoid?

Hang on its already 6 months and they're trying to say they should be able to pay you in a months time?

I'd get in there quick before they fold. Get legal claim in asap.

psychocandy
12th March 2013, 12:00
Well, thanks again Northernladuk. I've just issued them with a notice of interest due. However, I'm not going to wait and I now just want the fastest way of retrieving the original balance.

They've said that they do intend to pay "as soon as [they] are able", but they seem to be relying on current investment negotiations/April VAT return to pay me. I am indeed worried that they'll go under before I get paid.

What are the pros/cons between small claims and a debt-collection service? Which is likely to be faster? My instinct is to go through the small-claims court but there seems to be a cutoff at £5000, after which the process changes. They owe me just slightly more than that based on a number of different invoices.

Is there any point in limiting my claim to £5000 in an effort to push it through faster?

Whats this 'pay as soon as they able' bollacks? Sod that they owe you. No excuses. Seriously, matey, time to kick off now and stop being nice.

Try walking into Tesco, picking up some cornflakes and telling them you'll pay them as soon as you're able.

psychocandy
12th March 2013, 12:01
I don't think there was anything gormless about my question. Today is the first day I've actually got them to admit there might be something wrong with their finances and I'm following things up through Citizens Advice as well, to try and find a pro-bono lawyer.

Does anyone else have any advice?

And you didnt think it might be a problem when they hadn't paid after 5 months?

yusefkerr
12th March 2013, 17:25
Enough making me feel like an idiot, you've made the point by now. Does anyone have any actual advice on the following:

1. There is no dispute about the amount they owe to me, they're just avoiding paying. Is there any reason for me to go to a Small Claims Court?

2. Assuming the above answer is no,

- From what I've read online I have to give them 7 days notice that I intend to issue a Statutory Demand or employ a Debt Collection Service, which I've now done.
- After this time, I can issue a Statutory Demand myself and there's a template for this here: https://www.gov.uk/statutory-demands/forms-to-issue-a-statutory-demand
- If that still doesn't get a response (they have 21 days to pay), I would pay £450 for a solicitor to issue a Winding Up Petition

How would employing a Debt-Collection service speed this up, or improve my chances, and is there any benefit in going to a solicitor earlier?

northernladuk
12th March 2013, 17:40
4 days later and you still haven't engaged a professional??? I think you are gonna have to kiss this payday goodbye.

d000hg
12th March 2013, 18:08
My big concern is that they're going to wind-up the business and I won't receive anything. Does this sound likely for an 18-month old start-up employing around 10 people, or am I being paranoid?


Holy crap! I would be more than paranoid in that situation. I think I would be bricking it. I hope it isn't a lot. I don't think there is any hard figures about startups failing but a quick search shows a few people putting it at around the 80% mark don't make it to the end of year 2.While NL is right here, I thought the question was if the business would be likely to wind up simply to avoid debts rather than if it was about to go under.

yusefkerr
12th March 2013, 20:37
NorthernLad, as I've explained, I don't see what a lawyer or debt-collector could do for me that I can't do for myself at the moment. Does anyone have specific advice on the 2 questions I've asked above?

To be clear, I'm concerned that their business is not yet making money and that they will only be able to pay me if current investment rounds are successful.

northernladuk
12th March 2013, 21:35
NorthernLad, as I've explained, I don't see what a lawyer or debt-collector could do for me that I can't do for myself at the moment. Does anyone have specific advice on the 2 questions I've asked above?

Yeah, a debt-collector and/or lawyer.

They wouldn't have left it 6 months before taking action...
They would know the answer to your question about small claims court...
They would know what steps to take in your position....

That is three reasons they are a better bet than you pounding a free forum....

Wanderer
13th March 2013, 10:41
They've said that they do intend to pay "as soon as [they] are able", but they seem to be relying on current investment negotiations/April VAT return to pay me.

Piffle. Go in and go hard on them, you've extended them quite enough credit and now it's time for them to pay up. You can be sure that there are plenty of hard nosed business people out there who have done the same thing to them and have been paid so don't be a soft touch.

At very least get them to agree a payment plan so they can pay in stages.

psychocandy
13th March 2013, 10:43
Enough making me feel like an idiot, you've made the point by now. Does anyone have any actual advice on the following:

1. There is no dispute about the amount they owe to me, they're just avoiding paying. Is there any reason for me to go to a Small Claims Court?

2. Assuming the above answer is no,

- From what I've read online I have to give them 7 days notice that I intend to issue a Statutory Demand or employ a Debt Collection Service, which I've now done.
- After this time, I can issue a Statutory Demand myself and there's a template for this here: https://www.gov.uk/statutory-demands/forms-to-issue-a-statutory-demand
- If that still doesn't get a response (they have 21 days to pay), I would pay £450 for a solicitor to issue a Winding Up Petition

How would employing a Debt-Collection service speed this up, or improve my chances, and is there any benefit in going to a solicitor earlier?

I don't understand (1). The might not dispute it - doesn't matter - but they still have not paid. How long are you going to allow them to blag it by being nice and stringing you along?

I would be getting a professional collections agency involved by now.

psychocandy
13th March 2013, 10:44
NorthernLad, as I've explained, I don't see what a lawyer or debt-collector could do for me that I can't do for myself at the moment. Does anyone have specific advice on the 2 questions I've asked above?

To be clear, I'm concerned that their business is not yet making money and that they will only be able to pay me if current investment rounds are successful.

But the other businesses cashflow problems are not your concern. I'd be more concerned about getting my claim in quickly while theres a small chance they might have some money left.

psychocandy
13th March 2013, 10:44
Yeah, a debt-collector and/or lawyer.

They wouldn't have left it 6 months before taking action...
They would know the answer to your question about small claims court...
They would know what steps to take in your position....

That is three reasons they are a better bet than you pounding a free forum....

Not a good day when I agree with everything NLUK says in a post.... :tumble:

northernladuk
13th March 2013, 11:18
Not a good day when I agree with everything NLUK says in a post.... :tumble:

Show me the love baby!!! :hug:

Safe Collections
21st March 2013, 13:19
Enough making me feel like an idiot, you've made the point by now. Does anyone have any actual advice on the following:

1. There is no dispute about the amount they owe to me, they're just avoiding paying. Is there any reason for me to go to a Small Claims Court?

2. Assuming the above answer is no,

- From what I've read online I have to give them 7 days notice that I intend to issue a Statutory Demand or employ a Debt Collection Service, which I've now done.
- After this time, I can issue a Statutory Demand myself and there's a template for this here: https://www.gov.uk/statutory-demands/forms-to-issue-a-statutory-demand
- If that still doesn't get a response (they have 21 days to pay), I would pay £450 for a solicitor to issue a Winding Up Petition

We gave you advice and pointed you in the direction of a guide that answers the questions you have, however to clarify:

Issuing a Statutory Demand yourself is worthless as it is unlikely to be taken seriously and any experienced solicitor will want to send a further three day winder anyway.
A winding up petition is likely to cost in the region of £1500 - £2000 in total not £450.
A winding up petition does not guarantee you will get paid. If the company is insolvent you will get nothing.


Winding up a company is a last resort and the court is likely to want evidence that you have tried to collect the monies owed in other ways first. Additionally if a company is new or does not have significant assets all you will be doing is increasing your loss for no gain.


How would employing a Debt-Collection service speed this up, or improve my chances, and is there any benefit in going to a solicitor earlier?

No agency can guarantee to collect in a certain time or without legal action (and you should avoid any agency that does), however we do this all day everyday. We know how to interpret company accounts, we can tell if the directors have a history of dissolving companies (useful to know before you spend £2k) and some of us are also licensed credit referencing agencies. Which means we can and do provide payment data to other credit referencing agencies :wink

So as in the link previously your options are, in order of upfront costs:

Collections Agency (usually £0.00 in advance)
Small Claims (Court fees, varies by amount owed)
Winding Up (£1500-2000 in solicitors fees, costs and disbursements)

Hope that helps :)