Reply to: Charging Interest on Overdue Invoices

[Safe Collections]

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...atutory-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:

1. 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.
2. A winding up petition is likely to cost in the region of £1500 - £2000 in total not £450.
3. 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

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

[northernladuk]

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

Show me the love baby!!!

[psychocandy]

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....

[psychocandy]

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]

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...atutory-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.

[Wanderer]

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.

[northernladuk]

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....

[yusefkerr]

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.

[d000hg]

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.

[northernladuk]

4 days later and you still haven't engaged a professional??? I think you are gonna have to kiss this payday goodbye.

[yusefkerr]

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...atutory-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?

[psychocandy]

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?

[psychocandy]

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]

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.

[Safe Collections]

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" this should answer a majority of your questions on how to move forward.

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