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Debt Collecting

15th July, 2020
  • How do I improve debtor collection?
  • Answers to late payment arguments

My debtors are slow, or won’t pay me…

How do I improve debtor collection?

It is vital that businesses explore the options available to them in recovering their outstanding debts, before it is too late.

By reading this you will hopefully improve your own debtor collection. Particularly take a look at the late payment excuses below for good replies to the common “cheque’s in the post” excuses!

One of the most important things for a business, of any size or type, is to have is a credit policy. A credit policy will help when considering new customers, or what to do if an existing customer has failed to pay on time. Have this policy in writing, referring back to it whenever needed, and stick to it.

Dealing with late payment and how to avoid it in the first place;

  1. Introduce a strict policy for debtor collection built around specific target dates.
  2. Make sure you have a proper application form/contract and terms & conditions that new customers will check and sign. If an account does go bad, it is vital that you are able to prove the trading terms, agreed between you and your customer. A verbal agreement will unfortunately mean next to nothing when chasing someone for money.
  3. Assertively collect debts it is your working capital
  4. Take references up! Most do not. We are amazed at how many businesses fail to ask for references, how many fail to read and act upon any they get and how lax credit limit enforcement is when faced with “iffy” references.
  5. Buy a subscription to a credit reference agency early warning system. This is particularly important if you regularly open new accounts and or large accounts. It is so cheap to do and can save you, literally, thousands of pounds. Try Creditsafe
  6. Refuse to supply even if a “good ” customer is over limits, call them and ask what the problem is. Do they have the invoice, delivery note and are they satisfied? If yes, ask for your money. If they still don’t pay consider issuing:
    1. Final warning letter – you will commence action if you do not hear within 7 days – this helps establish that the debtor accepts the debt.
    2. Obtain a County Court Summons form from your local court; issue a copy of it with all details correctly filled in. (We are amazed at how many people go to the bother of issuing half filled out forms!)
    3. Tell the debtor you will issue the summons in 5 working days unless they pay. If this fails:
  7. Issue the summons to the court. After judgment is granted call the debtor for the money. If this fails:
  8. Proceed with a warrant of execution – basically an instruction to the court to collect the money (they send a bailiff to do this). If this fails:
  9. Consider a winding up petition if the debtor is a company or a bankruptcy petition if the debtor is a sole trader or individual.
  10. Up to the last step above this is a relatively inexpensive way of debt collecting
  11. Build a collection system, use “Sage” or other accounts package or use a manual system with trigger dates for every invoice.
  12. Charge interest – its your money.
  13. Go to the customer’s premises and demand to meet the owner, MD or finance director. Say you will not leave until the company gives you a cheque, even if its post dated.

Remember a good customer who does not pay is not a good customer long term!

Answers to late payment arguments

Q: “We have not got your invoice, please send a copy”

A: Take their name and position in the debtor company. Fax, post and email a copy, then call for the person you spoke to and ask when payment will be made.

Q: “The cheque is in the (ubiquitous) post”

A: Where, when and by whom was it posted and what class of stamp was used? Set a reminder in your diary to call again the next day or two days if sent second class. Again, find out why the cheque has NOT been posted.   These days online banking is much more common and “faster payments” mean that you should be able to be paid the moment that you request it.  Maybe set up a text alert on your bank account that can tell you when a payment has been sent.  This can ensure that you are not having to constantly check your online bank account.

Q: “We can only pay you when a large debtor pays us”

A: Get the name and contact details and call the debtor yourself, check out the story, is it true? If yes, ask the debtor when they envisage paying some or all of the money. Then set a reminder in your diary to call the customer when payment should have been received.

Q: “We cannot pay we are at the bank limit”, or “the bank is not helping us, we have a cashflow problem”.

A: Ask if they know about s123 and s214 Insolvency Act 1986 (insolvency test and wrongful trading). Write to them, pointing this out. Tell them to look at our website Refuse to supply until an agreement for payment is reached.

Q: “The person responsible for payments is away”

A: Ask the person how other essential payments are made such as utilities and wages. Get a commitment to pay you too – even some on account.

There are many more excuses but all add up to the same thing – if the customer cannot pay to your terms they may be insolvent. So beware. If they are a key customer go and see them; talk together about a plan to recover the position. You may accept staged payments over time provided that new supplies are paid to terms.
If they are insolvent and readily admit they have problems with the bank and the crown then steer clear until the position is resolved.

Be terrier like, never let go until the debt is paid (even in stages) or they have gone into an insolvency mechanism. Then get full details of the liquidation, receivership, administration or company voluntary arrangement. It may still be possible to get your money (particularly in CVA or Administration). If you want advice on such insolvency situations email us.


Consider all of the options available to you before beginning legal action. Sometimes this option will be successful and force your debtor into acting positively. This will not always be the case however. Unfortunately taking legal action can often prove to be the most expensive & ineffective option.
Discuss your debt with an expert on debt collection, who will approach your debtor on your behalf. The debt collector will act in your best interests, with a view to ensuring that your debtor pays their outstanding balance as quickly as is possible.

Look at our page on company debt advice for more information.

If debt collection is a constant problem and you are always chasing companies that are good for the money but are just very very slow at paying then there are other ways of improving your cash flow.  It may be that you can get advance payments on your invoices or your ledger by being lent the money.  This is known as invoice finance and can allow your business access to the working capital.  There are lots of variations on the theme of getting paid in advance for money owed to your business.  See more at

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Superdry Maybe Looking At A CVA

Update : 15 April 2024It hits the news today that landlords of Superdry are considering a restructuring deal that would result in steep rent cuts at a large proportion of its 94 British shops. The scale of the rent cuts would be dependent on the financial performance of each site.According to City sources, the fashion retailer is not planning on any permanent closures, but landlords would have the option to terminate any leases if they were not satisfied with the terms of the deal.Superdry has been facing red for some time. Most recently there were talks with founder, Julian Dunkerton regarding a takeover, but such talks were then aborted.Sky News share more. Update : 29 January 2024In line with other retailers Superdry has been finding trading difficult due to the cost of living crisis.  It has also been cutting back its store count. The clothing brand has 104 stores in the UK and started closing some back in July 2023.  The company also announced that it was looking at costs savings of some £40m.  This is an increase from the £35m they announced recently.  There are now rumours circulating that the company is looking at a Company Voluntary Arrangement (CVA) as a way of cutting costs.The CVA is a powerful rescue tool that is particularly favoured by retailers due to is ability to allow companies to vacate properties and determine their lease obligations.  The cost of high rent shops on long leases can be a heavy burden on retailers.The following case law has been used for some years now to terminate leases with no cash cost to the company.Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease.Re: Cancol Ltd (1995) BCC 1133 that the word ‘creditor’ in r1.17(1) IR 86 was wide enough to include a landlord with a right to future rent i.e. the ability to include future rent extends to CVAs as well as Individual Voluntary Arrangements.Furthermore, where the unliquidated or unascertained claim in a CVA involves future rents accruing to a landlord, the case of Re Park Air Services [1996] BCC 556) gives the CVA meeting   chairman some considerable guidance as to quantifying the claim at the meeting.Another reason that Superdry is finding itself in difficulty is that it rapidly expanded to try and become a global super brand.  No doubt much of this expanision was fueled by cheap debt and as many companies are now finding out when interest rates rise and customers pull back the going gets very tough.  As such the shares have lost almost 90% of their value in the last 12 monthsSky News has reported that PWC are the advisors that are looking at restructuring options.It is quite standard practice to put out stories about a possible CVA as this does prepare the ground for negotiations with landlords.  They will be asking the landlords for substantial rent reductions in order for them to survive.  If landlords refuse then they can usually get other suppliers and trade creditors to support a CVA proposal and out vote them.Landlords have tried to challenge CVAs in the courts on the grounds that they unfairly prejudice their position but have so far failed to succeed. 

Superdry Maybe Looking At A CVA

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