Recovering trading and distribution receivables

What an open-account claim actually looks like

Most supply relationships run on an open account with credit terms, successive shipments and part payments that are not allocated to particular invoices. The result is that both sides may agree a balance exists while disagreeing on its size — a very different dispute from an outright denial of the debt.

The first practical step is therefore not a demand letter but a reconciled statement showing the invoices, the payments, how each payment was allocated, returns, and any agreed deductions.

The documents that support a supply claim

An invoice proves you asked to be paid, not that you delivered. The document that usually decides the matter is proof of delivery: a delivery note signed or stamped by the recipient, an electronic proof of receipt, or correspondence in which the customer refers to goods received.

To that add the purchase order or accepted quotation, credit terms agreed in writing, any post-dated cheques, and any acknowledgement of balance. Part payments generally help, because paying against an invoice is hard to reconcile with disputing it later.

The unallocated-payment problem

When sums are paid without identifying the invoices they settle, working out what is actually outstanding becomes a matter of interpretation — and that ambiguity is routinely used in negotiation to defer payment.

The practical fix is to rebuild the account from the documents and put it to the other side for written reconciliation. A counter-signed reconciliation is often worth more than three demand letters.

Returns and contested deductions

Deductions for quality, late delivery or volume rebates are common in this sector and are frequently raised late as a reason to suspend payment. Separating them from the undisputed amount stops the whole claim from stalling.

Where a deduction rests on an earlier agreement, showing it openly in the statement removes an entire line of later argument.

How we handle a supply file

We review debtor ageing and supporting documents, rebuild a statement that can be defended, and identify the amount that can be claimed with confidence. We then approach the debtor professionally and on the record, and negotiate a settlement or a payment plan with clear instalments and defined consequences for default.

In portfolios covering several overdue accounts, files are ordered by strength of documentation and realistic collectability rather than treated identically.