The debt and how it occurred

One of our long term clients in the recruitment business came to us with amounts owed to them totalling almost £43,000. The total amount, consisting of many invoices from a customer of theirs who had previously paid on time and had never given any cause for concern, had accrued over the space of a 3 month period. Our client approached their customer when they missed the usual prompt payments after the first of these three months’ worth of invoices turned into overdue invoices. They were told the late payment was due by a knock on effect in the payment chain from one of their big contracts who had delayed payment to them. They offered reassurance the payments were secured and the invoices would be honoured. Our client then continued to supply their customer with staff to help them through this awkward period. When this repeated again and again in the following months, the same reason for late payment seemed to be dragging and our client decided enough was enough and as no payment (not even part payment) was forthcoming they were left with no other choice and engaged our Recruitment Debt Collection Service.

The initial debt recovery work and steps towards obtaining payment

The Sterling recovery team began working through their process with each of the invoices. One of the challenges they worked through was to establish a reliable point of contact by telephone at the debtor side, someone with enough authority to take ownership of the debt who we could discuss getting the debts paid with. As the debtor had delayed payment beyond the agreed ‘grace’ period our client had offered them, they were also informed about the late payment fees they owed to our client, raising the total amount owed to almost £50,000.

Negotiating and managing the debtor repayments

Our recruitment debt recovery team worked in discussions with the point of contact at the debtor to achieve the fastest repayment plan for our client – it was clear from the beginning that due to the events leading up to the debt being owed that a good settlement offer and covering the risk of losing out altogether, should the debtor go under, was key. Keeping our client informed along the way and liaising between them and their debtor brought the matter to an accepted offer of repayment in three instalments. At the request of the debtor our client also agreed to resupply staff to them once the second instalment was received.

The result, how much was collected and the recovery costs

After 2 months of successfully managing the debt payment plan, ensuring they were made according to the agreed repayment schedule, Sterling had recovered the full amount for our client (including the late payment fees which more than covered our No Win – No Fee commission fee for debt collection).

Our client may have left this particular situation to run on too long before engaging us, nevertheless the result speaks for itself and is a good example that involving the right third party collection agency and engaging a professional approach to debt recovery is far more effective at achieving results in most cases than threatening legal action as a first call. Here we have achieved payment in a very reasonable amount of time, the debtor has effectively covered our commission fee for our client and they are left with a surplus amount over and above the original overdue invoice amounts.

If your company or business are facing similar difficulties achieving payment from established customers, remember that as is also shown in this example, engaging a debt recovery approach may not necessarily mean the end of the business relationship for you. Contact us for a no obligation discussion about how our debt collection service may suit your requirements.

You can also check our statutory interest late fee calculator to see how much interest you can legally claim on top of the overdue invoice amount.