New figures released by the Registry Trust (January) state that there was a 20 percent drop year-on-year, in the number of County Court Judgments (CCJs) registered against businesses in England & Wales in Q4 2019^[1]

The total number of judgments against all businesses decreased from 29,303 in Q4 2018 to 23,418 in Q4 2019, and was accompanied by a 21 percent drop in the total value of judgments from £117,546,664 in Q4 2018, to £92,311,503 in Q4 2019.

The fall in business CCJs largely affected incorporated businesses. The numbers fell by 27 percent, from 21,373 in Q4 2018 to 15,626 in Q4 2019. Judgments against incorporated businesses account for 67 percent of all business judgment numbers and 74 percent of their total value.

Statistics released by the Registry Trust are a good indicator of the economy, however the construction industry contributes seven percent of the economy and received the highest number of insolvencies by sector in the 12 months ending Q4 2019, the construction industry group saw the largest increase in underlying insolvency volumes with 3,198 (69 more, a 2.2% increase) compared with the 12 months ending Q3 2019^[2].

Emma Miller, Top Service Company Director said:  “The spike in the number of insolvencies felt by the construction industry lies in part to the ongoing economic uncertainty across the UK, driven by political unrest, Brexit uncertainty, delays in investment for large construction projects and heavy competition for contracts pushing construction companies to work to tight margins; plus the wave of several high-profile corporations going into administration which has rocked the industry. These economic factors have undoubtedly had an impact on the drop in company CCJ’s. With all this uncertainty, filing for a CCJ brings considerable risk of expense to the claimant which has contributed to the number of CCJ’s dropping, we have also seen a sharp fall in the value of CCJ’s claimed for. The smaller the value of the claim the less companies and individuals are inclined to take the risk to proceed with court action.  There are many myths around the process and outcomes of serving a company with a CCJ. We recommend the claimant take all reasonable steps to collect the monies owed before entering into litigation and seek expert advice to fully understand the process and responsibilities in taking court action. ”

What is a County Court Judgement and what to consider?

A County Court Judgement (CCJ) is essentially a court order, issued by a county court, that enforces the payment of a debt. A CCJ acts as evidence of insolvency and can be used to close a company by its creditors. Court fees and solicitors’ fees can be high and although added to the claim amount, if the debtor doesn’t pay the claimant will be left to pay the court fees. Regardless of how spurious a defence if filed by the defendant, the correct process has to be followed, incurring further fees. Once a claim is submitted, there can be a lengthy wait for a court date. Despite many thinking that if the claimant wins the case in court the other side pays the costs – that is not always the case. 

There of course many options when considering legal action to recover a debt. Information is key, especially within the construction sector which relies heavily on reputation. Consider local knowledge, trading history, previous credit information and information gathered through the collection process. The more information acquired will not only help guide the claimant to the most effective type of action but will be used as evidence in court, increasing the claimant’s chances of a successful collection through legal action.

Instructing a third-party collections service:

With the financial uncertainty of proceeding with a CCJ, it is wise to seek professional and expert advice. Instructing a collections service will ensure that all of the required pre-action protocols are covered prior to legal action and trained negotiators will get the best outcome in court. Instructing a third party will take any personal relationships out of the equation which businesses can struggle with when collecting debt. A collections service provider will focus on relevant credit information to form a collection strategy and should advise to proceed only if sufficient evidence is available.

For enforcement advice or more information on credit management, debt prevention and recovery  services, please contact Top Service by calling 01527 518800 or email helpdesk@top-service.co.uk.

[1] Counnty Court Judgements against England & Wales businesses fall 20% year on year in Q4
[2] Company insolvency statistics, Q4 October to December 2019

We are ready and excited to be attending:

Executive Hire Show 2020

The Ricoh Arena, Coventry 5th & 6th February 2020

“This Show brings the industry together and is the annual event where passionate hirers meet Innovative suppliers. To be held on Wednesday 5 and Thursday 6 February 2020, Executive Hire Show is a trade-only event open to hire executives throughout the UK and Ireland, and it has also attracted hire industry visitors from Europe and beyond. Senior executives from the procurement and purchasing departments of the national hire operations attend the Show, along with large numbers of independently-owned entrepreneurial hire outlets. 

If you are attending the show let us know and come along to visit our stand K58, Hall 1. We have our expert staff on hand to answer your credit management questions and offer useful tips and advice.

Learn how you can make the most of our services from debt prevention to debt recovery.

For a bit of fun, come to our stand and try your luck at our Lock Box Challenge, unlock the box to win a prize!

We will also be giving away Top Service goodies from bumper stickers and pens to tape measures and mugs so, make sure you grab your Top Service merchandise when you visit our stand.

Want to join us at Exec Hire 2020?

To find out more about Executive Hire Show 2020 and to register your attendance visit:http://www.executivehireshow.co.uk

When it comes to opening trade credit accounts there is always going to be a level of risk to you and your business. The risk to your business is not just about whether or not you will get paid it is also about whether or not you are about to start trading with a fraudster.

We are now seeing more and more potential fraud being reported from bone-fide company details being used without their knowledge, to fake companies being set up in an effort to obtain goods fraudulently.

We see that the industry is becoming more and more frustrated with how fraud is dealt with and as the #1 credit reference agency for the construction industry, supporting our industry is really important to us.

Here we talk about how you can minimise your exposure to fraud but even with every possible check done, search being carried out and question being asked you should never ignore your gut feeling of ‘something just isn’t right’ because our experience tells us when something doesn’t feel right it usually isn’t!

So, how can you help to protect yourself? Below are some tips and formal checks you can carry out before providing goods on credit, most importantly, don’t just ask and record the details – check them!

Using a credit application form is the easiest way to ensure relevant and appropriate details of the potential customer are being taken. It doesn’t have to be long winded or lengthy, simply take the basic details you need to open a credit account and protect yourself:

Company Name AND Registration No
The entity of business if not Limited
Names of key people in the business
Contact numbers & email addresses

Using a credit application form is one thing but the key to protecting yourself is in the detail and checking the form and information provided for any anomalies is where you will be able to protect yourself the most.

What should I check?

Use a credit reference agency to check you have been approached by a bone-fide company.

Check the Directors of the Limited company and see if they have a lot of either active Directorships, resignations or insolvent companies.

Use your credit reference agency to look at the trading history of the business, have other suppliers experienced non-payment or made enquiries about potential fraudulent applications.

Where you can, make a physical visit to the customer or potential customer if something doesn’t feel right to you.

If you already have a trading history with the business look at the orders that have previously been placed. Some fraudsters will establish a good line of credit with suppliers, placing small, regular orders to give the appearance of a good customer. Once an order pattern starts to change, ask questions to establish the reason for the change.

The internet opens up a lot of avenues to carrying out non-intrusive checks

Look at the addresses you have been given, are they active trading addresses (as opposed to a mailbox)? Is it a residential address when you would expect it to be a business address or vice versa? There could of course be perfectly legitimate reasons for having numerous trading and / or delivery addresses but taking the time to check could be what will save you! Never allow goods to be cross-loaded to unidentifiable vehicles waiting at the delivery location.

Search the business name and or directors / proprietor / partners names with other suppliers you may come across out of area news reports or other information that will help you.

Check phone numbers, dial them or use the internet to search for any reports of mis-use. Once a fraudster leaves your depot or takes delivery that is likely to be your last contact with them. Is the telephone number ringing and is it a normal tone? If it goes to the answerphone, is the mailbox full? This is a sign that messages are not being returned. Why would an active business not return and delete messages?

Send a confirmation email – we hear of so many people whose initial suspicions to fraud are raised when they email the invoice and the email bounces back. Check it first – a confirmation email thanking the customer for their application or order can help to pre-warn you of any problems and is also customer service friendly so your customers will see this a great customer service tool!

In short:

• Confirm the details on the application are true, using credit information, the internet or ID checks
• Check the condition of the business applying for goods on credit
• Is the order consistent with past transactions or as you would expect it to be?
• Satisfy your gut feeling and if you can’t, assess the risk and if needs be decline the application.

Testing is also important. It will help to ensure new processes and current processes are providing the protection you need. Internally, submitting a fictitious order or application will help you to track if you are getting the desired outcome.

What if you are a victim of fraud?

Report it – Call 101 or report to Action Fraud
Share it – Sharing your experiences is the quickest way to stop fraudsters in their tracks. Talk to your trade association or industry specific credit information agency who will be able to make others in your industry aware.

For further information or support relating to fraud prevention or anything else relating to credit management please contact us:

Top Service Ltd
Tel: 01527 518800
Email: helpdesk@top-service.co.uk

2-3 Regents Court
Far Moor Lane
Redditch
B98 0SD

Telesales Consultant

Top Service Ltd has been supplying credit information and debt recovery services to the construction industry for over 25 years. Over 2,600 suppliers to the construction industry currently take advantage of the services offered.

The Telesales Consultant performs a key function within Top Service’s growth plans. The purpose of the position is to increase the customer base, particularly through outbound calls to prospective business customers. The Telesales Consultant will represent Top Service Ltd and will have a comprehensive understanding of the services being offered. Using excellent telephone skills the Telesales Consultant will qualify prospective customer needs, articulate appropriate solutions and ultimately meet sales targets. The Telesales Consultant will be required to develop and qualify both leads coming into the business and leads created through their own means. The Telesales Consultant will have the ability to provide high quality and targeted demonstrations of Top Service’s offering over the phone using the company website. Both prospective and customer information must be accurately recorded into the customer database for tracking purposes. As well as a bonus, the role also offers a commission structure based on an initial number of sales.

To be successful in this role you will need to be a high performer who is:

• Positive
• Energetic and self-motivated
• Tenacious and resilient
• Driven and well balanced
• Goal Orientated

Your key accountabilities will be clear, measured and managed and will include:

• Achieving sales targets of a specific number of sales per month.
• Phone-based activities (average telephone calls per day)
• Building a qualified sales pipeline
• Sales conversion rates and overcoming customer objections
• Productivity
• Maintaining accurate records
• Assisting your direct manager to develop, implement and review the sales process and strategies

Key Benefits:

• A competitive salary with bonus scheme
• A motivated and target driven environment .
• An excellent training programme with ongoing support and recognition
• Healthcare Cash Plan

For further information about this job role and how to apply, please telephone: 

Jo Carby 01527 518800 

We invite you to join our professional network

Following an announcement made by HMRC earlier in the month to extend the date for the implementation of the VAT Domestic Reverse Charge for Building and Construction Services until 1^st October 2020, we thought it prudent to clarify the impact this will potentially have on accounting practices for  businesses operating in the construction sector.

Firstly, what is the VAT Domestic Reverse Charge For Building & Construction Services and who will it affect?

HMRC has introduced the VAT domestic reverse charge for building and construction services initially due to be enforced from the beginning of next month. However, after much controversy the deadline has been extended and will now not be enforceable until October 2020 there remains no transitioning period.

The new VAT reverse charge rules will impact certain Construction Industry Contractors, Trade Contractors and Subcontractors with the aim to defend against on-sale fraud in the construction sector. VAT-registered Contractors who supply construction services to another VAT-registered business will be required to issue a VAT invoice stating that the service is subject to the domestic reverse charge.

The business in receipt of the services must declare the VAT due on that supply to HMRC via a VAT return  instead of paying  the amount directly to the contractor. In short, the ‘customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier’.

HMRC guidance sets out what you need to do to be ready for the start of the domestic reverse charge which includes ^[1]:

• checking whether the reverse charge affects either your sales, purchases or both
• making sure your accounting systems and software are updated to deal with the reverse charge
• considering whether the change will have an impact on your cashflow
• making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate

What contractors need to do

If you’re a contractor you’ll also need to review all your contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.

What sub-contractors need to do

If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.

Further guidance and a comprehensive list of construction services affected and those exempt can be found here.

¹ What you need to do to be ready for the start of the domestic reverse charge

We are proud to announce that our internal Credit Management Training has passed the quality endorsement criteria with Open College Network (West Midlands). This stamp of approval is important as it reflects the high standards we place on our staff training and continual professional development programme.

Emma Miller, Top Service Managing Director said;

“We are delighted to be awarded this seal of approval by the Open College Network (WM). Our staff training is an integral part of our business which ensures we deliver to our members exceptional customer service which is up to date and thorough. Our training is a platform for our staff to develop their career within Top Service, learn new skills and provides individuals with the essential competencies to progress further with industry recognised qualifications.”

Our training offer includes core modules covering:

• Credit Management
• Customer Service
• Civil Litigation
• Collection Techniques

About Open College Network West Midlands

Open College Network West Midlands is a national and international Awarding Organisation, regulated by Ofqual, qualifications Wales and the Quality Assurance Agency for Higher Education (QAA), to develop and award regulated qualifications.  We work in partnership with a wide range of stakeholders including colleges, training providers, employers, universities, schools and voluntary and community organisations to offer vocational credit-based qualifications across a wide range of sectors.  With a proud history of developing skills solutions across industries for over 35 years, we offer over 250 vocational qualifications that range from Entry Level to Level 5.  As a highly responsive, commercially minded and flexible Awarding Organisation we are constantly developing new qualifications for our diverse customer base. We work with over 350 organisations covering all regions and countries in the UK, as well as also working internationally. Over recent years the organisation has been the recipient of numerous awards, including the SME Midlands Business Award for Best Customer Service.

In an industry which relies heavily on supply chain and excellent customer relations, having to deal with overdue invoices, repeated late and non-payments can not only affect immediate cash flow but the opportunity for repeat business and client referral. In the event that an account moves into dispute having the time and right approach to work towards a resolution without damaging customer relationships or causing negative impact to your projects can be a never-ending cycle.

Emma Miller, Company Director of Top Service answers some of your frequently asked questions to help you achieve success in collecting those overdue payments:

How can we improve the success rate of our debt collection process?

Ideally for the best chance of collection a debt should be no longer than four weeks overdue before passing to a third party. At Top Service we would suggest no more then three letters are sent in-house. If they haven’t responded then they are most likely ignoring you and it will be prudent to refer swiftly into the next stage of your collection process.

Know your rights when it comes to claiming interest. Whether it is contractual interest or statutory interest, you are entitled to it. If you are unsure about what interest and other charges you are entitled to contact us for FREE advice.

Can we pass the debt collection cost onto our customer? 

Yes, for commercial debts you can claim interest, compensation and costs of using third party collectors when applying the statutory legislation for late payment.

Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim interest at a rate of 8% above base rate and a compensation figure, depending on the value of the debt you are collecting:

If your collection costs are more than the compensation figure you are claiming, you can claim the surplus under the late Payment of Commercial Debts regulations 2013.

Winning a legal battle in court –  does this mean the opposing side pays our costs?

Judges in the County Court have discretion in relation to costs and can make a costs order if they feel it is appropriate whilst taking into account the value of the claim, the successful party and the conduct of the parties during the litigation process. However, generally the recovery of legal costs depends on the track your case has been allocated to. If your claim is allocated to the small claims track then usually costs are not awarded and each party pays their own. However, a judge in the small claims court may decide to award costs & Part 27 of the Civil Procedure Rules outlines the maximum costs which a judge can order a party to pay. Where cases have been allocated to the Fastrack, normally the successful party is able to recover their costs on a fixed scale from the losing party. The amount awarded and whether an award is made at all is decided by the Judge. The costs limits that apply to small claims and fast track cases do not usually apply to cases in the Multi-track. The losing party will generally be ordered to pay the costs of the winning party where the costs are reasonable and proportionate.

If we have credit insurance do we still need credit information & recovery services?

Yes, with your policy you will have discretionary limits which a limit you can trade up to without the formal approval of the insurer. If you need to make a successful claim you will need demonstrate you have carried out credit checks and other due diligence to mitigate any risk of trading. When an account becomes overdue you will also need to demonstrate you have taken relevant collection steps and effective litigation to collect your money, this process needs to meet the requirements of your credit insurance policy.

With credit insurance premiums being so high it is likely you have smaller customers that you decide not to insure. It is important you don’t forget about the importance of credit management for your un-insured accounts and make good use of your credit information and collections services.

This April we saw an unprecedented move by the Chartered Institute of Credit Management (CICM) to take action on companies who fail to meet the standard of the Prompt Payment Code (PPC) which has seen 17 companies removed or suspended from the Code during the past quarter for failing to meet the majority of their payments within 60 days of an invoice being issued.The published list holds the names of several major construction companies reflecting badly on our industry but not unsurprisingly given that construction companies write-off thousands of pounds because of bad debt caused by late and non-payment each year. According to a study carried out by specialist financial services provider Bibby Financial Services (BFS) and industry experts, The Vinden Partnership (TVP) ‘Sub-Contracting Growth’ 2018 reveals that three-fifths of subcontractors working in the construction industry (60%) have suffered from bad debt in the last 12 months, with the average firm writing-off £16,149 each year^[1].

“The move by the CICM is welcome to the industry as it recognises the struggles companies face when it comes to late payment, particularly for the construction industry. As a company, we are proud to be an approved signatory of the Prompt Payment Code. For over 25 years we have been supporting the construction industry with tools and information to increase their protection from bad debt as well as developing services to assist with the collection of overdue invoices. We know first-hand the impact late payment has on our members. The knock-on effect from the top of the chain to the bottom can be devastating,” says Emma Miller, Company Director Top Service. 

What is the Prompt Payment Code (PPC)?

The Prompt Payment Code (PPC) is administered by the Chartered Institute of Credit Management on behalf of the Department for Business, Energy and Industrial Strategy (BEIS). Compliance with the principles of the Code is monitored and enforced by the Prompt Payment Code Compliance Board. The Code covers prompt payment, as well as wider payment procedures. 

Member Benefits

All signatories of the Prompt Payment Code (PPC) are eligible for a 25% discount on our subscription fee.

Are you claiming everything you are entitled to for bad debts?

Where an invoice is not paid or is paid late, the Late Payment of Commercial Debts (Interest) Act 1998 allows you to claim interest and compensation and the Late Payment of Commercial Debts Regulations 2013 allows you to claim recovery charges above the compensation amount awarded. ” 

 “Interest claims for non-payment are split into two categories, contractual and statutory. Contractual interest must be stated in the terms & conditions and / or contract and agreed with the customer before the product / service is provided. 

The majority of construction businesses who are providing trade credit to customers will turn to the statutory interest legislation to ensure they are being compensated for late payment. 

The statutory legislation (Late Payment of Commercial Debts (Interest) Act 1998) allows for interest to be claimed at 8% above base rate and also a compensation claim of either £40, £70 or £100.00 depending on the value of the debt. 

The statutory legislation can be applied to business debts that are ‘late’ the Government outlines ‘late’ as being 30 days after either the customer receives the invoice, or you deliver the goods/provide the service (if this is later than the customer receiving the invoice). Unless you have agreed longer terms to pay with your customer. In these cases, the debt would be ‘late’ after those agreed terms have passed.

In terms of raising invoices for these late payment charges, there is no need. You claim your interest and compensation on the gross amount of the invoice. Your customer should treat the payment of interest to you as they would bank charges. There is no need to raise a separate invoice for these charges. 

To enable your customer to process payments for interest and to ensure you are covering any required pre-action protocol should the need for legal action be necessary it is advisable to confirm you claim for interest within your chasing letters. If you are passing your case to a 3^rd party for recovery, then your nominated 3^rd party should do this for you. 

Can you pass the debt collection cost onto your customer? 

Any claims for your debt collection costs not claimed under the statutory legislation should be agreed within your terms & conditions and / or contract with your customer.  Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim a compensation figure, depending on the value of the debt you are collecting:

If your collections costs are more than the compensation figure you are claiming, you can claim the surplus under the late Payment of Commercial Debts regulations 2013. 

To help improve your chances of a successful collection for interest and / or charges and to meet any pre-action protocol required for legal action you should ensure any claims for interest, compensation and charges are ‘reasonable”.

For more information on debt prevention and recovery contact our expert team.

^[1]                                 The Vinden Partnership (TVP) ‘Sub-Contracting Growth’ 2018