We identified and resolved a long-standing billing issue for a new client and arranged a suitable payment plan to recover a £80k debt, as well as enabling their supplier to put in place the necessary safeguards to prevent a recurrence.
The Situation
We became involved with the new client involved in the steel processing industry as their previous broker relationship had deteriorated due to poor service. As part of our initial due diligence checks we noticed the client was receiving estimated bills and began submitting meter readings to the supplier to ensure they were billed accurately. This would prevent an unnecessary credit/debit balance building up due to prolonged under/overestimated billing.
The meter reads were regularly challenged, and photographic evidence was requested by the supplier, which we provided. We queried why photographs of the meter concerned were being requested. Usually it is an indicator of a problem e.g. a read not following on from a previous read in an expected pattern or a material issue with the meter. The supplier provided brief responses lacking sufficient detail and suspended billing to the client for three months.
Our approach
The supplier’s actions were out of the norm and we suspected there was a larger issue at play and persistently requested supplier updates on behalf of the client.
It transpired that the meter had been incorrectly registered as an eight-digit meter rather than ten-digit meter by the supplier’s registration which meant that the first two digits of the read were being excluded from the supplier’s billing systems leading to three years of inaccurate billing. The meter was underbilled by a factor of ten accruing a hidden debt of over £80k. This should have been identified much sooner by the original broker had they provided aftersales care and account management services, rather than taking a “price and run” approach.
Now that the issue was identified, the client would have to pay the £80k debt if they switched to another supplier as the account would be reconciled upon production of the final bill. This would put them in a very precarious position with their cash flow and if they did not pay then the supplier would be within their rights to escalate it through debt recovery proceedings, which would have a negative impact on the clients’ credit rating.
The Solution
Whilst the client was legally responsible for the debt, we argued mitigating circumstances caused by the incorrect registration of the meter by the incumbent supplier and requested a payment plan be set up by the supplier to recover the debt in a fair and timely manner. We cited the supplier’s responsibility to ensure the financial safety of the contract and they agreed to a payment plan of one year rather than their standard three-month repayment window, which would get the debt down to zero while spreading to burden on the client’s working capital.
The supplier also agreed to provide a break-even contract for that period so that they would not profit from enslaving the client to another year of contractual obligation, as whilst collecting the debt the client did not have the freedom to swich to another supplier.
The Outcome
The client was able to repay the debt at a level which was acceptable to both parties. The client also benefited from a reduced-price contract during the period of repayment and the supplier was able to review the weaknesses in their system, update procedures and IT infrastructure to flag anomalies between meter details entered into the system vs meter details held on the national database to prevent any future loss arising from a similar situation.
