Dealing with the NON Paying client?

[lee foster]

Hi All , We were stung to the tune of £24k 2 years ago by a company we had carried out work for over 3 years who untill this point had no with no issue with the standard of our work.
They had always been slow payers and we always had to chase them for money , we supplied them with 30 days credit and normally got paid after approx 60-90 days , when they eventually "bumped us" they stated that our work was not to their standard and they had to return and rectify it , they would not allow us to return to rectify or even take a look at the claimed poor work and in fact they never even supplied us with specific details on what was wrong.
We got a solicitor involved as i believed they had no chance of winning in court only to be told by the solicitor that unless we had another £20k to potentially lose in Legal fee's if the case didn't go our way we should walk away ,after a lot of thought and as much as it hurt our cashflow for a while we chose to follow our solicitors advice , we are a family business and have been trading for 10 years with a good reputation and a good core business which we still have.
The Company involved we have learned since have done this before and since , they have gone bust about 9 months ago but started again the next day.


The Lesson i have learned is to carry out a credit check before you take on new business to business deals and put within your T&C's that all equipment remains your property untill paid for and also put this as a disclaimer on the bottom of all of your invoices , if you are carrying out Domestic or small works just don't give credit , if they don't pay at the end of the job take it back out!! , as for Certificates i have to agree with the earlier comment that the "Contract" isn't complete untill full payment is made , i appreciate that you should issue it but let's face it , if you're going to ripped off by your customer what's the worst the NICEIC , Elecsa etc can do?.
That's my Rant over and Good Luck to you all.

Thanks

Lee

 

[Cyberprog]

There are ways and means to penetrate the veil of a limited company and persue those responsible if you can prove the course of action they took was unlawful (i.e. trading while insolvent).

 

[La Poste]

There are ways and means to penetrate the veil of a limited company and persue those responsible if you can prove the course of action they took was unlawful (i.e. trading while insolvent).

But they are not trading while insolvent.

They have changed name and turned into a different company with a brother or cousin as a new director.

The previous director will be banned for a while but his brother won't be, his brother has a clean slate and a new company name.

And if your family is in the business of ripping people off there is no end of relatives willing to take the mantle as new director for a new LTD company family business.

It's water tight legislation if you're a criminal.

I don't mean to sound too negative but you really have to be aware that the LTD company scam is used a lot by dodgy builders and dodgy car clampers and anyone else who's dodgy.

I mean let's face it.
If you want to take a chance and borrow loads of money on a business that might or might not work then become a LTD company.
If the ---- hits the fan then any debts you have will be written off and your personal assets like your house will not be affected.
I mean who wouldn't gamble in this way, it's a win win situation.

Personally speaking I would love to nail these people to the wall but i just don't think it's possible.

Some one please teach me.

 

[lee foster]

We are a LTD Company ourselves so i'm fully aware of the in's & out's of it , my point really is to do your homework on any new Business deals , we went into this particular one with our eyes closed , if we would have carried out a credit check or read the signs of late payment over the 3 years it should have set alarm bells ringing.
My loss i guess but one i wouldn't want any other honest Business to have to go through.

Lee

 

[Rockingit]

I've just hit this one as well. Job going on for a builder that I've done stuff with before, so thought there was an element of trust allowable, and much to my own shame didn't follow my own normal rules of 30% up front. So now he's paid 10% of the original quote 'on account' and all of sudden now seems to not be able to answer his phone, or emails, just as I'm chasing long overdue payment on the next installment. Having done a credit check this afternoon, and seen his list of CCJ's (or rather, his limited company's CCJ's) I'm now feeling more than a little twitchy!

He has until Friday to make good otherwise I'll be on site ripping out some seriously expensive SWA's that have been first fixed.

 

[Rockingit]

AND....... one hour after writing the above, a transfer appears, unbidden. So do I take it as a blip, or make an issue of it?! Oh the joys of small business.

 

[Marvo]

We've encountered our fair share of non-paying clients over the years. The larger ones we take legal action and out of probably 7 or 8 court cases over 15 years we've never lost one yet. If you have a decent paperwork trail you'll win. We're very particular about signed orders, order numbers, delivery notes, site job book sheets and completion/handover paperwork. We also keep a detailed photographic record of every contract we do.

Until fairly recently we used to drop the odd smaller amounts that probably involved throwing good money after bad. This changed when we had one arrogant SOB customer who owed us a few thousand and basically said he wasn't going to pay because he had better things to do with his money. I sold the debt to a collection agency that a friend recommended to me. The company was above board and fully registered and licensed, I was paid 50% of the debt and wasn't allowed to contact the customer again or have any further dealings with him.

A week later I received a very irate phone call from the S.O.B. calling me all the names under the sun. Apparently the agency harassed him from dawn till dusk seven days a week. They'd got hold of all his families mobile numbers (including his kids and his mothers) as well as his unlisted home number. They interrupted one of his golf games and embarrassed him whilst he was eating in a restaurant one evening. They even harassed his wife whilst she was dropping the kids at school and one time when she was at the gym. It took them less than a week to get him to pay.

The only problem with this route is that you're definitely going to burn bridges and there's a good chance the customer's going to give you a bad name to everyone they talk to. Sometimes it's worth it though

 

[fuzzydunlop]

Exactly what I said earlier, debt collectors have all the time in the world to annoy people and they do, even if its only for £50. Not sure about hassling his wife on the school run but, if she finds out what he's really like/up to everyones a winner imo

 

[1shortcircuit]

The company was above board and fully registered and licensed

Using the tactics you mention above?

I'd be interested to aquire the details of this company

 

[Marvo]

I'm in South Africa but I'm sure there's several around that are more local for you. These guys are eager to buy small debts but they need accompanying paperwork that would stand up in court. They were happy to negotiate on the percentage paid and I though 50% was very reasonable. There was one thing that surprised me, I expected they would have used six foot six Nigerian fellows to do their dirty work but 80% of there collectors were women who looked like normal housewives. Makes sense I suppose, I know if my wife has her mind set on something you've got more chance of stealing rottweiler's new born puppy than ignoring her.

 

[1shortcircuit]

I'm in South Africa

Doh! lol

I see that now ha ha

I was wondering how these people would get away with such tactics. The company would be shut down here

 

[rugbynick]

sue in the small claims court if all else fails. Usually find that turning up and refusing to leave often works