Non paying customers

[cliffe_mafia]

Hi All

My wife runs a creche and we have a couple of customers who have left owing us two to three hundred pounds each. We employ about 10 staff and recently had to let one go due to increasing costs and in the current climate every pound counts.
They have been contacted by phone and are still unwilling to pay. What is our best option to get our money back - I know it's not huge amounts so is it worth going to the small claims court and if so how do we go about this?
A solicitor has told us they can send 5 threatening letters for £75 plus vat which might convince them to pay up.

I recall a thread similar to this one but my search drew a blank. So if anyone can point me to it or offer any advice or experience I'd be really grateful.

Cheers.

[jamesuk28]

Hi Feel free to contact me either via PM or phone [phone] if you want some free advice. Or see http://www.letterbeforeaction.co.uk

James

Edited by jamesuk28 on Friday 17th October 17:18

[paoloh]

You might be owed £3k in total say, but individually quite small amounts. Could be quite costly to collect individually. As James is willing to give some free advice, take it.

[Mr POD]

Change your charging policy. If you pay by direct debit in advance it's £X. If you pay by cash 10 days in advance it's £X minus £5. If you wish to pay in arrears it's £2X plus £X if it's not paided 30 days after invoice.

Take each and every one to small claims court, write the letters yourself for free.

Dear Mr & Mrs Z
Your account is now due. If not paid withing 28 days I will start court action. I am not a charity, and times are hard. Your failure to pay on time has resulted in someone loosing thier job.
Yours


Then Susan them.

Christ, my daughter girl guide group collects a term in advance. It's not hard. No fee no place.

[jamesuk28]

Mr POD said:

Dear Mr & Mrs Z
Your account is now due. If not paid withing 28 days I will start court action. I am not a charity, and times are hard. Your failure to pay on time has resulted in someone loosing thier job.
Yours

With respect, That won't get you very far

[Mr POD]

jamesuk28 said:

Mr POD said:

Dear Mr & Mrs Z
Your account is now due. If not paid withing 28 days I will start court action. I am not a charity, and times are hard. Your failure to pay on time has resulted in someone loosing thier job.
Yours

With respect, That won't get you very far

With respect, if you know the names and addresses, and can prove they owe payment, the only thing I can see is that it's perhaps a bit too direct.

They owe money, he's asked for it, they've not given it, what else can you suggest? I'm no expert, but I have won in the small claims court, just the once.

[jamesuk28]

Mr POD said:

jamesuk28 said:

Mr POD said:

Dear Mr & Mrs Z
Your account is now due. If not paid withing 28 days I will start court action. I am not a charity, and times are hard. Your failure to pay on time has resulted in someone loosing thier job.
Yours

With respect, That won't get you very far

With respect, if you know the names and addresses, and can prove they owe payment, the only thing I can see is that it's perhaps a bit too direct.

They owe money, he's asked for it, they've not given it, what else can you suggest? I'm no expert, but I have won in the small claims court, just the once.

I am not saying contacting them won't work, I am saying that letter format wont work and letter from the creditor is usually ignored. I am sure the OP has tried that.

You need to show the debtor you mean business, otherwise it will drag on and on. The ultimate conclusion is a small claim in this case, but they can be dragged out for months. The aim is to recover the money if possible before court action, or if that is not possible to be ready to enforce judgement.

[JustinP1]

Believe James above.

You can send your own template letter, and do it yourself, but my understanding is that what he charges for simple stuff is not much more.

With things like this, there does seem to be a tipping point where the right words and right pressure works. Don't feel bad by using someone 'external' sooner rather than later if you are left owing.

My water company to me - with no history of non or late payment state that the bill is to be paid immediately. Not 30 days, or anything. Two weeks later they follow up with the 'solicitors' warning letter.

Nip it in the bud ASAP, don't let it ruin your business.

[edb49]

Absolutely agree with what James has said. A letter from a 3rd party is infinitely more useful than that from your own company.

[Mr POD]

edb49 said:

Absolutely agree with what James has said. A letter from a 3rd party is infinitely more useful than that from your own company.

Fair enough. I understand. A solicitors letter headed paper means the threat is taken seriously. Even if the threat was serious anyway.

[cliffe_mafia]

Thanks for all of your input so far. I've decided to hand deliver a final invoice and try to get at least half of the money (and then the rest later), face to face.

James, I've had a look at your websites and the service looks a worthwhile option but I'm hoping to get some money first by doorstepping them

In answer to Mr POD's reply above, quite a few of our customers pay in full regulary, a week or two after we've cared for their children so we would risk losing them. We do diligently chase any monies owed and these are the first serious non-payers in four and a half years. Also as we offer childcare by the hour and also allow parents to cancel with a few days notice, it is difficult for us to charge up front or in terms like a nursery would do.

Edited by cliffe_mafia on Friday 17th October 11:27

[ginettag27]

Putting items like this in writing first, even if it's "only" your own letterheaded paper or a strongly worded email always seem to get the best results. Maybe give 14/21 days and if full payment isn't forthcoming then add a late payment surcharge.. £25 or so... There is late payment legislation (EU) although that tends to cover B2B transactions afaik... not B2C..

We've only really had one bad paying customer, who was reminded in writing and by email.. They were a pair of solicitors!! FFS!!

Everyone else is usually quite good.

If it doesn't get a result, then a letter from a solicitor / agency should.

I think, in the last "bad paying customers thread" - the PH search facility still doesn't seem to be working... Someone recommended to offer to let them pay in stages... If they were struggling.. More to embarrass them than anything..

[jamesuk28]

ginettag27 said:

Putting items like this in writing first, even if it's "only" your own letterheaded paper or a strongly worded email always seem to get the best results. Maybe give 14/21 days and if full payment isn't forthcoming then add a late payment surcharge.. £25 or so... There is late payment legislation (EU) although that tends to cover B2B transactions afaik... not B2C..

We've only really had one bad paying customer, who was reminded in writing and by email.. They were a pair of solicitors!! FFS!!

Everyone else is usually quite good.

If it doesn't get a result, then a letter from a solicitor / agency should.

I think, in the last "bad paying customers thread" - the PH search facility still doesn't seem to be working... Someone recommended to offer to let them pay in stages... If they were struggling.. More to embarrass them than anything..

Its The Late Payment of Commercial Debts (Interest) Act 1998 European Directive 2000/35/EC

Statutory Compensation:

Upto £999,99 is £40
£1k - £9,999,99 is £70.00
£10k or more is £100

Per invoice

And Statutory Compensation at 8% above base rate from due date.

This is for B2B debts only.

You can also add in a debt recovery charge if incurred as long as its covered in your T&C's

We have collected from quite a few Solicitors in the past, perhaps they think nobody will dare take them on.

[gtr-gaz]

James managed to get all the money I was owed. Well worth his fee IMO

http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[Mr POD]

cliffe_mafia said:

In answer to Mr POD's reply above, quite a few of our customers pay in full regulary, a week or two after we've cared for their children so we would risk losing them. We do diligently chase any monies owed and these are the first serious non-payers in four and a half years. Also as we offer childcare by the hour and also allow parents to cancel with a few days notice, it is difficult for us to charge up front or in terms like a nursery would do.

Edited by cliffe_mafia on Friday 17th October 11:27

Simply offering a 5% discount if paid in advance would be a start. Reward those that HELP you cash flow.

[The Moose]

Small claims court is not somehting you need a lawyer for - its for small claims therefore no point claiming with the legal expenses. go down your local court/council, get the forms yourself, fill them and and post them back. job done. As you have all paperwork etc, you wont have a problem if they really do owe you the money. It might be worth sending them a letter saying something like "I know the current economic client is tough for some people, but it is also tough for us. We understand this and will accept the fee of £300 [say] in 10 lots of £31, one a week. If this is not possible (and we assume that if you do not contact us in reply this is not feasable) we will initial legal proceedings against yourself through the Small Claims Courts." or similar.

GOOD LUCK!!!

The Moose

[jamesuk28]

The Moose said:

Small claims court is not somehting you need a lawyer for - its for small claims therefore no point claiming with the legal expenses. go down your local court/council, get the forms yourself, fill them and and post them back. job done. As you have all paperwork etc, you wont have a problem if they really do owe you the money. It might be worth sending them a letter saying something like "I know the current economic client is tough for some people, but it is also tough for us. We understand this and will accept the fee of £300 [say] in 10 lots of £31, one a week. If this is not possible (and we assume that if you do not contact us in reply this is not feasable) we will initial legal proceedings against yourself through the Small Claims Courts." or similar.

GOOD LUCK!!!

The Moose

Its all done online now.

You dont need a Lawyer or debt collector to issue the claim, but a lawyer or debt collector may get your money before any claim is needed (can be a long process if the claim is defended) and they can be very effective in enforcing the judgement.

[POORCARDEALER]

jamesuk28 said:

The Moose said:

Small claims court is not somehting you need a lawyer for - its for small claims therefore no point claiming with the legal expenses. go down your local court/council, get the forms yourself, fill them and and post them back. job done. As you have all paperwork etc, you wont have a problem if they really do owe you the money. It might be worth sending them a letter saying something like "I know the current economic client is tough for some people, but it is also tough for us. We understand this and will accept the fee of £300 [say] in 10 lots of £31, one a week. If this is not possible (and we assume that if you do not contact us in reply this is not feasable) we will initial legal proceedings against yourself through the Small Claims Courts." or similar.

GOOD LUCK!!!

The Moose

Its all done online now.

You dont need a Lawyer or debt collector to issue the claim, but a lawyer or debt collector may get your money before any claim is needed (can be a long process if the claim is defended) and they can be very effective in enforcing the judgement.

Agree with that, pal issued court papers online through Northampton County Court........pal had to travel to London for the hearing (debtors local court) that took about 6 months, then the bloke said he didnt have a job and mate had to agree to £40 a month

[zadumbreion]

I guess this kind of thing is going to get a lot worse over the next 18 months. James, you jammy sod, your business is going to be in great demand.

In fact - we have a number of customers who are not paying our bills. They say they can't, because THEY are owed money and are chasing the debts through the courts.

Our difficulty is that we have long-term relationships with our customers - they're not one-off deals where it doesn't matter if they get offended by us getting legal and forcing them to pay.

What is the recommended approach in a case like ours then - when you need to maintain the relationships with the clients, and so don't want to upset them by getting heavy?

Problem is, we'll feel such mugs if they go under anyway, and owe us money. I suppose we're hoping that they will pull through and we will continue to deal with them...

Any advice?

Edited by zadumbreion on Friday 17th October 23:14

[spikeyhead]

zadumbreion said:

Any advice?

Meet with their finance director.

Sort out an agreed repayment scheme, they know that you can't continue to provide them with good service if you run out of money.

If they can't even agree to that then get legal with them, but try something amicable first.