If the debtor WANTS to pay, but just can’t … a Case Study

Our client, the creditor, is an accounting firm.

* All “standard” reminders had been ignored.
* Phone promises to pay not kept.
* Even a final “Letter of Demand” went unheeded.

The accountant who knew the client advised “He’s got a serious cash-flow problem”. We suggested we offer them a payment plan that the debtor COULD afford.

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This is what we sent on Tuesday, 02 October …

Dear Mr Smith,

Outstanding Fee Balance – $9,125.00

I’ve been advised that you may prefer to settle the attached invoices by way of monthly payments rather than trying to finalise them all at once.

If that IS the case, are you in a position to pay them according to the following schedule?
               amount                    to be paid by
               $2,500.00                20 October 2018
               $2,500.00                20 November 2018
               $2,125.00                20 December 2018
               $2,000.00              20 January 2019

If
1: this will provide you with some assistance and you are, please remit the first instalment as above.
2: you are not able to pay in the manner set out above, please contact me to let me know what you are able to manage as I do have to report to the Directors later this week and they are likely to suggest that we revert to policy in the absence of any reply from you.

I hope this helps.

This is the reply received 2 days later

Hi Andrew,

Yes these can be adhered to without any issues.
If we can pay them earlier we will do so.

Thank you

THE MORAL OF THIS CASE STUDY

If the debtors intent to pay is good but the ability to pay in full is not, consider going to them with an offer that they CAN afford. One that YOU would have accepted if they had originally come to you with that offer.

They WILL thank you for it and, more than likely, keep to that arrangement.