There’s nothing more soul-destroying than working hard on a project, delivering it on time, meeting all the deliverables, and then not getting paid. It feels like a punch to the solar plexus and can leave you reeling for weeks.
Worse still, though, it can actually harm your business’s bottom line, especially if you rely on vendors supporting your cash flow month to month.
In this post, we take a look at some of your options when vendors refuse to pay you. At first, you’re usually best taking a “softly-softly” approach. But you must always be prepared to crank up the heat if necessary.
So what should you do?
Issue A Payment Request
If the vendor refuses to pay you, start by issuing a 7-day payment request. The idea here is to make sure that the customer hasn’t simply forgotten to pay you, according to https://www.business.com/. It’s also a good opportunity for them to check if they have made any payment mistakes. Sometimes they can send payments to the wrong companies, especially if they operate inside a complicated supply chain.
Issue A Statutory Payment Demand
The next phase is to issue a statutory payment demand. You want to issue this when you know that the vendor is delaying unnecessarily.
These requests are essentially the start of formal proceedings against the vendor. It states that you need payment within a certain time frame (usually 21 days) or you’ll take the issue to court.
Statutory payment demands usually require the vendor to owe you a minimum amount of money. So check that you meet the threshold in your particular area before you issue one of these.
Get Legal Help
The next stage is to get legal help to make sure that you represent your company properly in court. Sites like https://www.fleeson.com/practice-areas/corporate-and-commercial-litigation provide more information on commercial litigation and the approach you should take.
Ideally, you want to find out whether the vendor can pay, or if they are insolvent. In some cases, you’ll be able to recoup your losses (as a kind of creditor to the now-defunct company). And other times, you’ll have to write off the payment.
In many cases, though, there isn’t actually a problem with the company itself, just their willingness to pay you. If they’re still refusing to hand over money, you need to find out why. If it’s sheer laziness, then your legal case is strong. However, if you failed to meet the deliverables, then they may have a counter-case against you.
In many cases, you may find that you need to carry out more work. The company will want you to make up for any perceived lost value on your end.
If you’re a small business, that can be a hard pill to swallow, which, again, is another reason for going to a legal professional. As far as the law goes, you need to find out where you stand.
In summary, when a vendor pays late, gentle reminders are the best approach. But if they outright refuse and you know you’ve met your end of the bargain, it’s time to take legal action.