Advice please – collecting overdue payment (Sole trader)

tweddle · 13 July 2015 at 11:00PM

Hi,

I would really appreciate some advice as I have receive a pretty nasty email from a client after I sent him an amended invoice with an 8.5% interest rate added as well as a £40 compensation fee, which I understand is within my rights as a sole trader. Unfortunately, having checked on Companies House, it looks as though his company has been dissolved. He previously stated that he would pay me via Paypal from his other company, so I don't know if that would count at all. Would it be a waste of my money to send this to the small claims court? All of my previous emails have been friendly, but after 65 days of waiting, I felt it best to write something more formal. He had been pre-warned (on the 23rd June) that I would be adding interest etc to his invoice and contemplating legal action, however he ignored my email.

Thank you!

This is my email to him:

Dear ...

Invoice Reference: 5136 & 5136/1 (see attachments of original and updated invoices)

Please be aware that court action will be the consequence of your ignoring this email.

Despite our numerous emails and your promise to pay the invoice, payment has still not been received. If full payment/proof of payment is not received by Wednesday 15th July 2015, court action will be taken against you. If you allow this to happen you will incur court costs and you may forfeit your credit status.

You are also being charged debt recovery costs and statutory interest of 8% above the reference rate at 0.5% (fixed for the six month period within which date the invoices became overdue) pursuant to the late payment legislation.

To avoid court action, please pay this in full now.

If you intend to use Paypal, please send the payment of £141.51 to...

Best Regards,
...
Amount overdue : £100.00
Interest : £1.51 (65 days overdue)
Debt recovery costs : £40.00

and here is his response:

What debt recover costs.
It's 100
Unless I do the same and charge you 40 for sending this mail.

Send me a proper invoice now for 100 and I will get it paid. Failure to send and I won't and i suggest you drop the silly games and charges.
Sent from my iPhone

paddyrg · 13 July 2015 at 11:36PM

So send one for £100, then decide whether or not it's worth the fight for the balance. Yes, you might be able to add that according to legislation, but a bird in the hand...

Mistral001 · 14 July 2015 at 11:09AM

Since you have threatened court action you have to take it otherwise you will be regarded as someone who issues idle threats. The judge will decide how much you are entitled to - he/she is an expert after all and considering that it is not very expensive to go to the small claims court it will be very inexpensive expert advice.

Stakkertoo · 14 July 2015 at 1:09PM

What do people think about perhaps sending another message, keeping it professional, but suggesting that if the £100 is not paid by 3pm tomorrow, that the small claims court will be involved, reminding him that he is sixty-five days overdue on your 30 day invoice and that a judge would consider that to be 'silly games'?

If his company is dissolved, do you know when that happened? Presumably he's been working cash only since it's dissolution, and not declaring his income? Bringing him before a court may open a can of worms far more damaging than a mere 100-150 quid.

Mistral001 · 14 July 2015 at 1:50PM

You have already threatened court action albeit in a rather vague way, but it is nonetheless a threat. To send out another threat would show signs of panic which most likely will be treated as a sign of weakness by the non-payer.

Trying to guess what is going on with your client as to whether they are in a position to pay or not is, in my experience, a worthless exercise in business-to-business dealings. Also, if they have gone bust you should be notified by the administrators as one of their creditors and then it will be a legal long-drawn-out process which I think is out of your hands.

[Deleted User] · 14 July 2015 at 11:28PM

Would you not consider using a collections company?

We use Control Account to collect debts, they charge a reasonable fee of 10% on successful collection of the account.

They will bombard the customer with emails, letters, phone calls and text messages.

Most people will get tired and pay even before the letter before claim is sent.

It saves us so much time and we don't have to worry about speaking to customers - as long as we don't want them as future customers.

I just wanted to add - we send debts to collections as quickly as possible, before these situations happen, as we once left a large debt for 10 months for a very well known company who then tried to deny the debt was owed. Our solicitors fees were stupidly expensive and we resolved the matter with our own contact in the end. The collections company offered us everything the solicitor did, but for far less money, and so we always use them now immediately after payments are missed.

jordanjim · 15 July 2015 at 9:58AM

assj- interesting info, we have been discussing hiring a collection agency because we're getting an ever-increasing number of customers not paying for no good reason. However, most of our outstanding debts are small (£30 - £200), do you know if your collection agency charges a minimum fee or is it 10% of any debt amount including small ones?

To the op, I would send a formal letter stating that you are offering one final chance to settle the outstanding invoice in full by the end of business on xxx date, after which the matter will be passed to the small claims court, including the late payment fees as entitled under the Late Payment of Commercial Goods Act (check the official act wording but I think it's right). Then actually follow through if payment is not made.

If payment is actually made, be glad that this guy isn't wasting any more of your time and blacklist him.

[Deleted User] · 15 July 2015 at 5:51PM

I just placed a £20 debt with them, they only charge 10% regardless, and I don't know what the minimum collection amount is, but as I said we have just placed £20 debt with them.

They are also very good at keeping records of calls etc, obviously they record them all and you can see all of their system notes on your log in page.

I really like the system actually, so far I have collected one debt! And I'm waiting on some more, one has just gone to a formal claim and I guess we may have to pay more for the court fees etc, which is still cheaper than our solicitor, who charges around £75 per letter and £150 to start the claim process.

Just to add you get a schedule of fees before you process the debts, it's just I cant remember what they all are, I just know that I was happy to pay the said amounts! But the collection fee was certainly 10%, but I think you can agree different rates with them dependant upon how much business you may be giving to them. They invoice you monthly if anything has been collected it appears with the relevant fee.

dvdrdl · 16 July 2015 at 7:52AM

I have just been through the whole small claims process and now that I have experienced it my advice would be, don't bother.

It's all fine and dandy til it gets to the bailiffs who do !!!!!! all, giving the crooks plenty of time and loads of leeway to worm out of it.

The court told me several varying stories of why it was unsuccessful and then basically told me to stop pestering them as they did their bit, speak to a legal advisor...

It's BS, write the debt off and hope karma catches up with them.

Mistral001 · 16 July 2015 at 10:26AM

dvdrdl wrote: »

I have just been through the whole small claims process and now that I have experienced it my advice would be, don't bother.

It's all fine and dandy til it gets to the bailiffs who do !!!!!! all, giving the crooks plenty of time and loads of leeway to worm out of it.

The court told me several varying stories of why it was unsuccessful and then basically told me to stop pestering them as they did their bit, speak to a legal advisor...

It's BS, write the debt off and hope karma catches up with them.

I have written off money from clients even after it was found in the small claims court in my favour but I do not think it is not worthwhile going through the process even if that is the eventual outcome. At least you can talk more openly about the people who owe you the money without fear of libel or slander. that means you might gain a little respect among clients and competitors alike.

YEOVILGOM · 16 July 2015 at 10:58PM

assj wrote: »

We use Control Account to collect debts, they charge a reasonable fee of 10% on successful collection of the account.

They will bombard the customer with emails, letters, phone calls and text messages.

Most people will get tired and pay even before the letter before claim is sent.

I'm sorry but is that a genuine debt collection technigque? Bore them into submission!!

Advice please – collecting overdue payment (Sole trader)

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