Small Claims problem
Discussion
Without going into loads of detail I have a small problem in that we (my company) have received a small claims notice in relation to a supplier.
The company in question factor all their invoices via a 3rd party. We put the invoice in dispute with the factoring company some weeks ago. It would have been due for payment on the 1/10.
The supplying company has now issued the small claims track in their name.
The problem is we owe the sum to the factoring company.
It specifically says in their invoice they will only discharge the invoice if we pay them directly.
What is the best to take this forward?
The company in question factor all their invoices via a 3rd party. We put the invoice in dispute with the factoring company some weeks ago. It would have been due for payment on the 1/10.
The supplying company has now issued the small claims track in their name.
The problem is we owe the sum to the factoring company.
It specifically says in their invoice they will only discharge the invoice if we pay them directly.
What is the best to take this forward?
Did you get a written warning of intended legal action?
To get this right, an invoice was due 11 days ago, and you have actual court papers delivered to you already?
I'd say the nature of the dispute has much more importance than a technical argument on whether it should be the factoring company suing you.
To get this right, an invoice was due 11 days ago, and you have actual court papers delivered to you already?
I'd say the nature of the dispute has much more importance than a technical argument on whether it should be the factoring company suing you.
Some factoring companies re-assign the debt to the original contracting party if the debt is not paid, but, as Justin notes, the timescale here is remarkably abrupt. If the factor has not re-assigned the debt, then the original company will not have a cause of action. That ain't a technicality, it's a substantive defence, but Justin is right to say that in real life sorting out the substantive beef is more important in the long run.
So Company A send us a letter saying we owe them some money for some dubious reasons. (no goods or services supplied I may add)
Its not a huge sum but we decline to pay as we feel we don't owe them anything.
Augusts invoice comes at the start of Sept from their factoring company as normal which only has said dubious charge on the invoice.
We notify factoring company that sum on hold as its in dispute (probably around 2nd week of Sept).
Invoice due for payment on 1/10.
12/10 we get notice from small claims but the company named on the notice is Company A not the factoring company.
We have not had any further communication with the factoring company (either way) since we told them it was in dispute.
It clearly states in a huge box in bold we can only pay them, not Company A to discharge the invoice.
On a separate matter we asked Company A to provide their reasoning behind why we owe them this money with their evidence and they have not provided anything or even replied to our e-mails asking for their evidence? Their claim form basically gives next to no information on their claim either.
?!?
Its not a huge sum but we decline to pay as we feel we don't owe them anything.
Augusts invoice comes at the start of Sept from their factoring company as normal which only has said dubious charge on the invoice.
We notify factoring company that sum on hold as its in dispute (probably around 2nd week of Sept).
Invoice due for payment on 1/10.
12/10 we get notice from small claims but the company named on the notice is Company A not the factoring company.
We have not had any further communication with the factoring company (either way) since we told them it was in dispute.
It clearly states in a huge box in bold we can only pay them, not Company A to discharge the invoice.
On a separate matter we asked Company A to provide their reasoning behind why we owe them this money with their evidence and they have not provided anything or even replied to our e-mails asking for their evidence? Their claim form basically gives next to no information on their claim either.
?!?
Breadvan72 said:
Some factoring companies re-assign the debt to the original contracting party if the debt is not paid, but, as Justin notes, the timescale here is remarkably abrupt. If the factor has not re-assigned the debt, then the original company will not have a cause of action. That ain't a technicality, it's a substantive defence, but Justin is right to say that in real life sorting out the substantive beef is more important in the long run.
I quite agree - I used the words 'technical argument' about the factoring company was not to suggest that it was that it is not valid - on the contrary, it's the first port of call to bat it back. My point is as you've pointed out is that doing so may not actually solve the problem here RE the company believing they are owed money - and all batting it back without getting to the crux might just elongate the process.
That said, the reason for my questioning the circumstances is that from what the OP has said, the company has fired off a fatally flawed claim, without warning and probably not even to a substantiative enough standard that could be responded to even if it were not.
I get the hint that they don't really know what they are doing. Don't mind at all receiving a PM, OP.
Edited by JustinP1 on Monday 12th October 16:11
Yes, the defence goes on the N9b.
As to the construction of it, I gave you my initial thoughts to the situation. As I said to you, BV is a lawyer, I am not, his legal opinion may differ, along with his opinion on how best to proceed.
You need to decide at this stage whether you:
a) Look to resolve as soon as possible, tell the guy that his claim is naff, you will beat it and offer settlement, or:
b) Defend the claim, using the assignment to the factoring company as a defence, providing the paperwork as evidence.
The latter gives you the chance to win outright if the other guy gives up. It's up to you which tactic you choose but you need to decide that before you proceed. Whether the 'long game' of batting it back will work will depend on BV's assessment of your chances with the unusual situation that occurred, as his next step might just be that he files a claim again, properly.
As to the construction of it, I gave you my initial thoughts to the situation. As I said to you, BV is a lawyer, I am not, his legal opinion may differ, along with his opinion on how best to proceed.
You need to decide at this stage whether you:
a) Look to resolve as soon as possible, tell the guy that his claim is naff, you will beat it and offer settlement, or:
b) Defend the claim, using the assignment to the factoring company as a defence, providing the paperwork as evidence.
The latter gives you the chance to win outright if the other guy gives up. It's up to you which tactic you choose but you need to decide that before you proceed. Whether the 'long game' of batting it back will work will depend on BV's assessment of your chances with the unusual situation that occurred, as his next step might just be that he files a claim again, properly.
I use a factoring company, and if a invoice/debt isn't paid by the due time, they recoup the money from me from any following invoices (of any source)... but keep chasing the client.
They then issue warning letters, make phone calls, and keep me in the loop - and if I agree, THEY take the small claims action.
The only time they might not consider legal action, is if a client disputed the invoice and the factoring company agreed and/or suspected that I was being dishonest.
Having recouped the money advanced to me originally, if the client then pays up, I get the total amount credited to my account by the factoring company.
I usually add interest to unpaid accounts by issuing an invoice for the interest, but I cannot factor that - and if the client pays it to the factoring company, they pay it straight into my account.
From your sketchy details, it looks like the factoring company may have washed their hands of it, so the company are doing it themselves. Good luck - I hate dishonesty in customers and suppliers - thankfully it has been rare for me.
They then issue warning letters, make phone calls, and keep me in the loop - and if I agree, THEY take the small claims action.
The only time they might not consider legal action, is if a client disputed the invoice and the factoring company agreed and/or suspected that I was being dishonest.
Having recouped the money advanced to me originally, if the client then pays up, I get the total amount credited to my account by the factoring company.
I usually add interest to unpaid accounts by issuing an invoice for the interest, but I cannot factor that - and if the client pays it to the factoring company, they pay it straight into my account.
From your sketchy details, it looks like the factoring company may have washed their hands of it, so the company are doing it themselves. Good luck - I hate dishonesty in customers and suppliers - thankfully it has been rare for me.
red_slr said:
So Company A send us a letter saying we owe them some money for some dubious reasons. (no goods or services supplied I may add)
Its not a huge sum but we decline to pay as we feel we don't owe them anything.
while you (as is often here, yet always strange) don't want to go into great detail here, a bit more on this might helpIts not a huge sum but we decline to pay as we feel we don't owe them anything.
Breadvan72 said:
Apols, a bit busy with work and arranging a funeral, but will still have a look when not coshed.
To be fair BV, to possibly save you some time, the situation is at a point where as I said above the OP needs to decide whether to settle or defend on the simple grounds discussed.The facts have an interesting twist, but, I fear if were fought on the merit of being open about the facts themselves that litigation would be a mistake.
Good luck OP, it'd be interesting if you came back with the outcome.
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