Information is power!

By James Salmon. 24/4/2017.

The Story

We were recently asked to get involved in a long-running dispute over an enormous debt owed by a huge organisation, part of a conglomerate managed from overseas. The debtor had a large network of UK companies within a group. The creditor was not a member (yet) but sought our assistance and advice with the case before going to court. The matter had already been dealt with by solicitors and debt recovery specialists. The CPA team delved into the data and quickly discovered that although there was a company that had the same name as their debtor, the original company had been dissolved and another company had then changed their name to adopt the original debtor’s name.

The new company may be live and carrying on the same trade. It may have the same name as the original company. But it has no legal liability for the debts incurred by the now dissolved, original company. Sadly no expert had previously noticed the switcheroo that had been performed, not the solicitors, not the advisors, not the other debt recovery specialists!

Unfortunately, our prospective member had already spent considerable sums on legal costs, preparing his case but the Credit Protection Association was able to save our future client from throwing more good money after bad. Suddenly the silence from this large group of companies was clearer; perhaps they have been stringing our client along waiting for the legal action before springing the bad news that the company that owed the money existed no more!

It has left a bitter taste in the mouth of our future member but it has underlined the motto that “Information is Power”.

How CPA could have helped

It is essential that you always know who you are trading with and that you have their exact identity, even with top grade customers. Our members use our Credit Application forms to ascertain the legal entities they are trading with, to gather their contact information and empower them to obtain a credit report. The CPA Credit report will then give a credit limit and score that can be relied upon and then on-going monitoring can be effected.

The Lesson

When everything is going well it is easy to take the view that it does not matter if you get the legal name and identity absolutely correct on the contracts and invoice. Both you and your customer are happy and you both think you know who is involved. However, in a (thankfully) minority of occasions where a dispute arises, those inaccuracies can come back to haunt you. Make sure you get the data correct up front! Know continually who you are dealing with and their credit status. Information is power and your determination to be accurate at the beginning will underline to your customer that you are going to be just as serious at the end of the transaction when it comes to the payment.