A small catering business was approached by a large health club to provide sandwiches and light refreshments. This was an informal agreement where orders would be communicated through text messages and telephone calls. No written contract was in place and no payment terms had been formally agreed although the small catering business did state 7-day payment terms on their invoices.
The large health club regularly paid the invoices later than the 7-day payment terms and would often combine several invoices and pay them in bulk, making it difficult for the small catering business to reconcile against their records.
There were 4 weeks of outstanding invoices which exceeded £7000.00, the small business contacted the health club to check the payment position. After contacting the small business, the health club cancelled the agreement and stated the balance would be settled within one week.
The small catering business accepted this decision and submitted their final invoice for services provided up to that date. The total value of the outstanding invoices was £7,905.28.
The small catering business received a payment of £7,495.42 and requested that the health club also made payment for the difference of £409.86. From this point, the health club did not respond to any emails sent by the small catering business.
The small catering business contacted the SBC with their complaint against the health club. Following this, the SBC contacted the health club on 3 separate occasions to try and resolve the dispute without success. On the 3rd occasion, the SBC were advised by the health club that the matter had been forwarded to their accountant to investigate.
With the dispute unresolved and with no further engagement from the health club, the Commissioner issued a formal determination letter and a formal request for representations No reply was received from the health club and a final determination letter was sent to them upholding the small catering business complaint with the consideration of publishing a report into the circumstances of the complaint, including the identities of the parties involved
After receiving this letter, the health club contacted the SBC to explain that the Director of the health club had been unwell and was unable to respond to the communications. The Commissioner allowed additional time for the health club to provide their representations about the circumstances of the complaint, which he would consider.
The health club’s representations stated that the health clubs did not receive the final service they had been invoiced for. This was disputed by the small business who stated the service had been provided but were unable to provide evidence to support their position with the production of a delivery note.
The health club offered the small business a “without prejudice” goodwill payment to settle the dispute which was accepted by them and the complaint was resolved.
After resolution of the dispute, the Small Business Commissioner observed that the frequent cause for disputes he encounters is the breakdown of informal agreements to supply goods and services. Early engagement and negotiation being an essential in finding a mutually satisfactory agreement to disputes.