Small business owed money - chasing debtor

Anna_Nonymouse

Hello!

My husband and I have a small business, limited company, we are joint owners, both Directors and I am the Secretary.

While I was on maternity leave, husband sent artwork to a gallery; gallery sold some pieces, and confirmed this on email July 2010.

It was not confirmed to us until an email in May 2011 how much we were owed. The emailer was not the gallery owner and was asking for an ex-VAT invoice, they were deducting it. We are not VAT registered, so don't do this, we want our full money owed, so husband then chased the gallery owner to confirm we could invoice the full £600. Emails were sent chasing on 23/05/11, 17/06/11, 30/06/11, 01/09/11 and we finally confirmed the amount and invoiced 22/09/11, so over a year after the art was actually sold.

(Two pieces went missing while they were with these people. Alas, we did not file inventory, so cannot prove they ever had them - infuriating, but lesson leant!)

Despite numerous emails and telephone conversations between husband & gallery owner, we have STILL not been paid - he sent us a cheque for half over 2 weeks ago, a second cheque was supposed to follow the next week and it never arrived.

What do I do next? I have told him on the phone this week that I expect the balance by Friday, or I will take it further. Is small claims the way? I have calculated the interest, but is that from when they sold it, or from when we invoiced?

Thanks in advance for your help

bengalknights

Yes small claims would be the way however try a send a letter before action (or if dont want to write try thomas higgins letter before action and see if that does it(think its £2)

Mistral001

Anna_Nonymouse wrote: »

Hello!

My husband and I have a small business, limited company, we are joint owners, both Directors and I am the Secretary.

While I was on maternity leave, husband sent artwork to a gallery; gallery sold some pieces, and confirmed this on email July 2010.

It was not confirmed to us until an email in May 2011 how much we were owed. The emailer was not the gallery owner and was asking for an ex-VAT invoice, they were deducting it. We are not VAT registered, so don't do this, we want our full money owed, so husband then chased the gallery owner to confirm we could invoice the full £600. Emails were sent chasing on 23/05/11, 17/06/11, 30/06/11, 01/09/11 and we finally confirmed the amount and invoiced 22/09/11, so over a year after the art was actually sold.

(Two pieces went missing while they were with these people. Alas, we did not file inventory, so cannot prove they ever had them - infuriating, but lesson leant!)

Despite numerous emails and telephone conversations between husband & gallery owner, we have STILL not been paid - he sent us a cheque for half over 2 weeks ago, a second cheque was supposed to follow the next week and it never arrived.

What do I do next? I have told him on the phone this week that I expect the balance by Friday, or I will take it further. Is small claims the way? I have calculated the interest, but is that from when they sold it, or from when we invoiced?

Thanks in advance for your help

If Friday comes and goes you will have to carry out your threat I am afraid. Nothing else you can do if you want to be credable as a business person I am afraid.

BryanSmallBiz

Like Mistral001 says: you must take action now. What you can charge for interest mostly depends on what you agreed to in your original deal with the gallery. Given that rates are so low and so the sum is so relatively paltry, I'd let the interest go in the interest of getting the other 50%.
Send the standard form letter and stick to the timings. If the gallery is still in business, most likely they'll buckle.

Premier_2

Anna_Nonymouse wrote: »

Hello!

My husband and I have a small business, limited company, we are joint owners, both Directors and I am the Secretary.

While I was on maternity leave, husband sent artwork to a gallery; gallery sold some pieces, and confirmed this on email July 2010.

It was not confirmed to us until an email in May 2011 how much we were owed. The emailer was not the gallery owner and was asking for an ex-VAT invoice, they were deducting it. We are not VAT registered, so don't do this, we want our full money owed, so husband then chased the gallery owner to confirm we could invoice the full £600. Emails were sent chasing on 23/05/11, 17/06/11, 30/06/11, 01/09/11 and we finally confirmed the amount and invoiced 22/09/11, so over a year after the art was actually sold.

(Two pieces went missing while they were with these people. Alas, we did not file inventory, so cannot prove they ever had them - infuriating, but lesson leant!)

Despite numerous emails and telephone conversations between husband & gallery owner, we have STILL not been paid - he sent us a cheque for half over 2 weeks ago, a second cheque was supposed to follow the next week and it never arrived.

What do I do next? I have told him on the phone this week that I expect the balance by Friday, or I will take it further. Is small claims the way? I have calculated the interest, but is that from when they sold it, or from when we invoiced?

Thanks in advance for your help

Forget the interest. We're talking about £300 shortfall here, and you didn't even invoice the gallery until 22 September 2011.

Now the question is, why has the gallery owner only paid you half of the bill? Why did he say he would pay the second half would be paid later?

If no other reason is given, it sounds like he's in financial trouble and you'll only waste your money on court fees if he hasn't got the money to pay you.

Find out why he hasn't paid and try to establish a mutually agreeable payment plan.

Court is really only good for for those that won't pay, as opposed to can't pay. He paid you 50% 2 weeks ago. Now negotiate with him when you will get the rest. Giving an unrealistic deadline of a few hours to get the money to you isn't going to get you the remainder I'm afraid.

Anna_Nonymouse

The reason the invoice wasn't sent until so much later on was because they didn't/wouldn't tell us what we were owed!

I have had an email to say the cheque wasn't sent, but will arrive with us recorded tomorrow.

Looking at his last years accounts summary with Companies House (he has a small business exemption), he is owed and owes a LOT of money. That said, he has just expanded his business into another gallery space, so can't be doing that badly!

If the cheque isn't with us tomorrow, I will send a letter before action. Thanks for all your help and advice

ETA: I think the reason I find the whole thing so galling is because he has sold something of ours, made more money on it than we did, been paid by his client and STILL hasn't sent us what I consider to be quite a small sum.

Premier_2

Anna_Nonymouse wrote: »

The reason the invoice wasn't sent until so much later on was because they didn't/wouldn't tell us what we were owed!

I don't understand. Did you not have a contract that laid out the terms of the agreement between the two of you beforehand? If not, there may have been nothing owed anyway.
Certainly nothing was owed until you invoiced for it (and without a contract in place, even that amount may not be agreed as owed)

Anna_Nonymouse wrote: »

I have had an email to say the cheque wasn't sent, but will arrive with us recorded tomorrow.

Right. Progress then.
Now ask for the cheque number (if they can't provide it, then chances are they haven't written it.
And ask for the tracking number of the recorded letter. At least you'll be able to see if something was actually posted (although there may not be any cheque in there of course!)

Anna_Nonymouse wrote: »

Looking at his last years accounts summary with Companies House (he has a small business exemption), he is owed and owes a LOT of money. That said, he has just expanded his business into another gallery space, so can't be doing that badly!

If the cheque isn't with us tomorrow, I will send a letter before action. Thanks for all your help and advice

ETA: I think the reason I find the whole thing so galling is because he has sold something of ours, made more money on it than we did, been paid by his client and STILL hasn't sent us what I consider to be quite a small sum.

That doesn't make any sense. Have you actually asked him why he has only paid you half? And why he wanted to delay the other half for a couple of weeks?

As you say, its only a small amount so why has he gone to the trouble of splitting payment into two and having to write two cheques, having to got the the PO to send it recorded, etc.

Until you get to the bottom of this, you really are probably wasting your time pushing him too hard, and if you continue to do so, he will only end up resisting even more, especially if he's currently trying his best to pay you.

Anna_Nonymouse

Cheque arrived on the Sat (deadline was Fri1) - let's hope it doesn't bounce.

Thanks for help and advice x