It’s never easy to ask your customers for payment during these difficult times. However, I hope you will find my top ten tips helpful in giving you some ideas how to approach this “thorny” issue. Let me know how you get on, and best of luck.
Listen to your customers to find out how they are positioned. Ask them how they are coping with the situation. Ask if they are having problems in making payment. If they are, ask them if they have taken advantage of the government schemes to assist during the pandemic. The phone will work better than email, simply because it is more personal – you can empathise over the phone and get more information than you will by email. The most important point to remember is to be “soft on the people but harder on the problem”.
Be timely. Ask them what time suits them best for a phonecall. Don’t be tempted to send loads of emails saying, for example, that you need to speak to them urgently. It will be better to say in an email that, in view of the current challenging times you would like to have a quick catch-up to review where you are both placed.
You may wish to mention to them that you are reviewing your current collection cycle. Explain to them that your systems automatically generate a series of letters requiring payment and, as each letter is sent, the letters become more “severe”. Explain that, in view of the current understandable difficulties, you would prefer to discuss matters with them rather than simply sending them demand letters. If you are unable to “switch off” your software and the chaser letters are still being sent out, explain why this is happening – perhaps apologise, and say you would prefer to have a discussion with them.
Try to explain that you want to explore how payment can be made in a collaborative way and that you are seeking a “win/win” solution. Try to get as much information as you can about when your customer is expecting payment themselves, perhaps from their own customers – do they have a payment cycle? Do they have a payment run? Ask if you are included in either – and if not, why not. If they cannot give any definite date for payment, are you prepared to accept instalments or deferred payment? If you are, then be sure to establish a definitive date when you will receive your cash.
If your customer is giving the impression that they will be facing insolvency, ask them if they have taken advice from an insolvency practitioner. If they have, then this is a sure sign that they may shortly be insolvent. If that is the case and you have supplied goods and you have effectively retained title to them then you may have to exercise your retention of title.
If your customer does become insolvent and you have the insolvency practitioners' details, then contact them immediately, detailing the nature of the goods supplied; that you have a retention of title over them; how your terms of contract effectively govern the contractual relationship; that you are able to identify the goods against the outstanding invoices; and that you want to make arrangements to uplift the goods. Don’t wait until the IP contacts you – be proactive and contact them.
It is normal for insolvency practitioners to reject retention of title claims. If this happens, don’t be deterred. Refer this to matter to us. The teams at both Yuill + Kyle and MacRoberts have significant experience in arguing these claims. We’re on your side and will do our best to get your goods back for you.
The vital point to note is that time is of the essence – the quicker you contact us, the more likely we’ll be successful in our engagement with the IP.
If your customer refuses to engage, then you are simply shadow boxing in the dark. It may be at this stage that you will want to refer this to a third party such as Yuill + Kyle. At this juncture, tell them that you want to be fair with them and explore all options. Emphasise that, if they do not engage, then you will have no alternative other than passing this to a third party to pursue. Keeping with the “empathic theme”, say that you will be reluctant to do this and say to them that you will not pass this on if they make contact with you within 3 days. Actually state the date you want them to contact you by as this will have greater impact.
If, despite all of your efforts, your customer will simply not engage with you then this may be the time to refer this to us. We will have various options for you. We can send our standard pre-sue letter or we could modify this for you – perhaps continuing the empathic theme. We can say we are aware that they may be having difficulty in making payment due to the current crisis and that what you want to do is engage with them to establish their current position. You may want us to say that you are willing to enter into discussions about an instalment plan or deferred payments. You may want us to add, however, that if they do not respond to us by a definitive date them your instructions will be to institute recovery proceedings but you hope that will be unnecessary.
Please contact Stephen Cowan if you would to discuss any of your debt recovery or cash flow options.
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