LTD company not paying!

AnnieS2

Hi all

I'm hoping someone can help me.

I started in business with my business partner at the start of the year and during March we got this huge client that needed tidy up accounting work done.

We got in and it turned out the previous finance guy had done absolutely nothing (no exaggeration) for the previous 9 months and they needed some accounts done for funding. We got this done and discovered they were in huge financial trouble that was too big for us and, as they wanted me to fix it for them and work more days than I could commit to, we pulled out of the job (after their accounts were submitted for funding).

We sent them our invoices and asked if there would be any problems with paying, they said "no" and parted ways with hugs and them saying they would like to get us back in when they were past the financial trouble.

Since then, they've now started saying the invoices are disputed and they won't be paying them, but don't seem to be able to give us solid reasons as to why they are disputed. We also have emailed to prove they wanted us to carry on working so they were happy with what we were doing. I know they are just trying to stall because they have cashflow issues, but they get enough cash in to pay our invoices.

They've done this before to suppliers and unfortunately for them I know all their tactics. I just don't know if I can use the fact that I know this information?

We are a new business and have mortgages to pay and we need that money!!

Unfortunately, we didn't get a written contract (lesson learned), but in theory we do have a contract because we agreed what we would do and how much we would do it for (which they then later asked us to reduce because they couldn't afford to pay my normal day rate, we agreed to help them out) and they kept us until we terminated so the conduct argument is there.

My question is:
Do we have a case?
If so, do I go down the county court route or just issue a STAT Demand? The latter is my preferred option, but what happens if they come back trying to dispute again without real reasons for dispute? Is the fact that we have everything documented enough to get their argument dismissed, as long as the court see in favour of our argument?

Thanks in advance!

Mistral001

Nobody here knows all the details so it is difficult to say whether you have a case or not. However I would behave 100% professionally from now on. In my view sending an invoice and then asking whether they can pay it is insulting and it can be argued that it is unprofessional as well.

Your invoice should be correct to the penny. If it is, stand over it. They have disputed it. That happens. Get them to list the items they dispute and their reasons for disputing them. If the invoice is not broken down, but is a single figure, then they can ask for a breakdown of it. If they do, it would help your case to provide a breakdown of the invoice in my view.

AnnieS2

We didn't just send the invoice and then ask for payment. Sorry, I should have explained that a bit better!

We issued the invoice, they've now had it over a month and it was due at the end of April. We asked them in our final meeting if there would be any issue with payment at the end of the month. It wasn't just sent and payment asked for immediately.

Our invoice is correct and has a full breakdown showing details.

We've asked for exact reasons for dispute and have not been given any.

Mistral001

AnnieS2 wrote: »

We didn't just send the invoice and then ask for payment. Sorry, I should have explained that a bit better!

We issued the invoice, they've now had it over a month and it was due at the end of April. We asked them in our final meeting if there would be any issue with payment at the end of the month. It wasn't just sent and payment asked for immediately.

Our invoice is correct and has a full breakdown showing details.

We've asked for exact reasons for dispute and have not been given any.

If they said no to that question, then you cannot then ask them if they want to pay in stages which would be one way of getting something in a poor cashflow situation. You cannot ask immediately anyway.

I would keep up the communication by sending them statements/reminders at least every month. I would ring them every week as well. You need to speak to the person who first gave you the work and not let them fob you off with their accounts department.

Aquamania

AnnieS2 wrote: »

Hi all

I'm hoping someone can help me.

I started in business with my business partner at the start of the year and during March we got this huge client that needed tidy up accounting work done.

We got in and it turned out the previous finance guy had done absolutely nothing (no exaggeration) for the previous 9 months and they needed some accounts done for funding. We got this done and discovered they were in huge financial trouble that was too big for us and, as they wanted me to fix it for them and work more days than I could commit to, we pulled out of the job (after their accounts were submitted for funding).

We sent them our invoices and asked if there would be any problems with paying, they said "no" and parted ways with hugs and them saying they would like to get us back in when they were past the financial trouble.

Since then, they've now started saying the invoices are disputed and they won't be paying them, but don't seem to be able to give us solid reasons as to why they are disputed. We also have emailed to prove they wanted us to carry on working so they were happy with what we were doing. I know they are just trying to stall because they have cashflow issues, but they get enough cash in to pay our invoices.

They've done this before to suppliers and unfortunately for them I know all their tactics. I just don't know if I can use the fact that I know this information?

We are a new business and have mortgages to pay and we need that money!!

Unfortunately, we didn't get a written contract (lesson learned), but in theory we do have a contract because we agreed what we would do and how much we would do it for (which they then later asked us to reduce because they couldn't afford to pay my normal day rate, we agreed to help them out) and they kept us until we terminated so the conduct argument is there.

My question is:
Do we have a case?
If so, do I go down the county court route or just issue a STAT Demand? The latter is my preferred option, but what happens if they come back trying to dispute again without real reasons for dispute? Is the fact that we have everything documented enough to get their argument dismissed, as long as the court see in favour of our argument?

Thanks in advance!

AnnieS2 wrote: »

We didn't just send the invoice and then ask for payment. Sorry, I should have explained that a bit better!

We issued the invoice, they've now had it over a month and it was due at the end of April. We asked them in our final meeting if there would be any issue with payment at the end of the month. It wasn't just sent and payment asked for immediately.

Our invoice is correct and has a full breakdown showing details.

We've asked for exact reasons for dispute and have not been given any.

By your own admission, you have no written contract, etc, or even a written purchase order - everything seems to have been done verbally, which you now seem to accept was a big error in any business transaction.

Therefore you have no PROOF of any debt owed (although you make representations here, but that is as I am sure you understand, only one side of the story), and you even go as so far as to question what happens if the alleged debtor disputes your claim.

This is therefore a classic debt dispute that courts up and down this land are more than familiar with.

Your course of action, should you wish to pursue this further, and once you reach the point that you feel you have exhausted all avenues of having this matter settled out of court, would be to issue a Letter Before Action and then a claim in the county court.

If you are successful in proving your right to the money in a court, and the defendant still fails to pay, then you can consider a Statutory Demand.

Doing it the other way round would be a classic example of putting the cart before the horse.

Edit:

For your additional information, we are not a large business, but try to operate similar strict credit control measures that any responsible large business does. i.e. no order number, no payment!
We don't even get into correspondence with anyone. Unfortunately, with the number of scam invoices we receive today, any invoice that does not include our valid order number on (which is one of our standard conditions of business), means we don't even look into them any more - they go straight in the bin.

Furthermore, our experience is that the larger the client, the longer they usually take to pay (and we reflect that in the price we charge).
Payment of invoice from a large client we would normally be expecting after say 90 days, and sometimes even up to 180 days depending on what was agreed.
Even many small-medium sized companies do not settle invoices until the end of the month folloing the month of receipt of invoice.

Finally, if we were aware a company was in "huge financial trouble", I very much doubt we would extend any credit at all to them. Payment up front for such high credit risks, I'm afraid, or at least staged payments (where all the risk was always on them).

Mistral001

Many professional services are provided without a formal written contract, so I would not beat up on the OP regarding that aspect of the contract. I do not think I have ever hired a professional service where there has been a written contract involved whether it be a service provided by an accountant , architect, dentist, solicitor, doctor, bookkeeper etc. Many professional services firms will have turnovers in the millions so they operate without written contracts quite successfully. They do not act in this way through poor business practices but because they know that although they do not have written contracts they can still take action in the courts if there is a problem.

System

AnnieS2 wrote:

We issued the invoice, they've now had it over a month and it was due at the end of April.

Why was it due at the end of April? You had no contract so there's nothing in there stating when it is due. Did you put its due date on the invoice you sent to them? If not then how is accounts payable supposed to know when it has to be paid by?

You can't go down the county court route until you've at least issued a reminder then a statement of accounts showing outstanding amounts payable and then a letter before action and they've not paid within the timescales on those.

Mistral001 wrote: »

I do not think I have ever hired a professional service where there has been a written contract involved whether it be a service provided by an accountant , architect, dentist, solicitor, doctor, bookkeeper etc.

However they will most likely have terms of business which you would have been able to look at and which they would have drawn your attention to if there was any issues. My dentist most certainly does in regards to payment for treatment, it is prominently placed in the reception and on notice boards throughout the surgery. I had terms of business I got every business client to sign stating liabilities, payment terms and penalties for late and non-payment. My website had terms that private clients could view and every single invoice had the methods of payment accepted and the payment terms on it. Without payment terms stated there is no time limit on how long a customer can take to pay you.

Whilst there's a contract agreeing the work to be done and the amount, there's nothing stating when it has to be paid by, nothing saying something like "payment due within 30 days from date of invoice" even if it is printed on the bottom of the invoice itself. Its a rookie mistake many make but as I said, one which means the client can pay them whenever they choose.