Sector

Debt recovery for manufacturers.

Manufacturers carry the same late‑payment exposure as construction subcontractors and for the same reason: their customers are often larger than they are. Quality complaints, tooling cost disputes, and retention of title clauses all become payment‑timing tools in the hands of a buyer who wants to delay. The contract terms decide the outcome.

The shape of late payment in manufacturing

Three patterns dominate. First, supply contracts with large corporate buyers where the buyer's procurement team imposes 60, 75, or 90‑day payment terms regardless of the supplier's standard terms. Second, batch orders where the buyer raises a quality complaint on a small percentage of units to delay the entire invoice. Third, tooling and setup invoices: the manufacturer fronts the cost of tooling for a new product run, and the buyer disputes the tooling charge after delivery.

The Late Payment of Commercial Debts (Interest) Act 1998 applies to manufacturing contracts in the same way as to any B2B supply. Statutory compensation, statutory interest, and recoverable costs are payable by the buyer in addition to the principal.

Retention of title clauses

Most well‑drafted manufacturing supply contracts include a retention of title (RoT) clause. The clause provides that title to the goods does not pass to the buyer until the buyer has paid in full. Where the buyer holds unpaid stock, the manufacturer retains a proprietary interest and is entitled to recover the goods.

RoT is a powerful pre‑litigation lever. A buyer who is sitting on stock they have not paid for, but believe they own, responds differently when reminded that the goods are still the manufacturer's property. We reference the RoT clause in Letter I where it is in force. The threat of repossession is rarely exercised; the threat itself usually closes the matter.

Quality complaint disputes

The most common dispute pattern in manufacturing recovery: the buyer accepts delivery, signs the goods‑receive note, and pays nothing, then raises a quality complaint when chased. The complaint typically references a small fraction of the batch ("five units in a hundred showed cosmetic defects") and is offered as grounds for withholding the entire invoice.

The recovery practitioner's first reading: did the buyer raise the complaint within the contractual quality‑reporting window? Most manufacturing supply contracts require quality complaints to be made within seven, fourteen, or twenty‑eight days of delivery, in writing, with samples returned for inspection. A complaint raised for the first time after the invoice falls due is typically outside the contractual window and procedurally weak.

The second reading: is the complaint about a percentage of the batch, or the whole batch? A genuine partial defect is grounds for a partial credit, not for withholding the whole invoice. The recoverable balance is the principal less the credit for genuine defects, with statutory compensation, interest, and recovery costs accruing on the balance.

Tooling and setup costs

Manufacturers often invoice tooling and setup separately from the unit price. Buyers sometimes resist these invoices on the basis that "tooling should be amortised over the production run". The contractual position is what matters. Where the contract specifies a separate tooling charge with a defined payment schedule, the charge is recoverable as a debt. Where the contract is silent, the matter is harder.

We assess tooling claims at intake against the contract terms. Most tooling disputes resolve on the strength of the documentary trail: signed tooling specifications, accepted CAD drawings, and the buyer's purchase order acknowledging the tooling line item.

Specific manufacturing contract clauses we look for

Payment terms (often net 30, frequently overridden by buyer procurement to net 60 or 90).
Retention of title (Romalpa clause). Whether title transfers on delivery, on payment, or on a defined event.
Quality reporting window and procedure (the contractual deadline for raising a defect claim).
Tooling and setup terms (separately invoiced or amortised; ownership of the tooling).
Limitation of liability (typical caps on damages but not on the principal debt).
Currency clauses for international supply (which currency the invoice is denominated in).

Our approach to manufacturing matters

Our intake form for manufacturing matters asks for the supply contract, the unpaid invoices, the goods‑receive notes, any quality correspondence, and the buyer's payment history if available. We assess within twenty‑four working hours.

If we accept, Letter I issues the same day. It cites the Late Payment Act, the contractual payment terms, the retention of title clause where applicable, and the contractual quality‑reporting window where the buyer has missed it. Recovery costs are payable by the buyer.

Most manufacturing buyers settle within Letter II. Those that do not are referred to county court claim or, where appropriate, to the buyer's insolvency practitioner if the buyer has entered formal insolvency. The retention of title proprietary claim is preserved through the insolvency process, which means that even an insolvent buyer's stockholding may be recoverable.

Common questions on manufacturing debt

The buyer is claiming defects on the entire batch. Can they withhold the whole invoice?

Generally no. Even genuine defect claims relating to part of a batch entitle the buyer to a partial credit, not to withholding the whole invoice. The recoverable balance is the principal less the genuine credit, with statutory entitlements on top.

What if the buyer has gone into administration?

If you have a properly drafted retention of title clause and the buyer holds unpaid stock, your proprietary claim takes priority over the unsecured creditors in the administration. Engage with the administrator promptly. The proprietary claim must be asserted, with documentary evidence of the contract and the unpaid stock.

Can I add a finance charge to the invoice if the contract is silent?

The Late Payment Act adds statutory interest at eight per cent above the Bank of England base rate from the date of default, regardless of whether the contract mentions it. Where the contract specifies a higher rate, the contract rate applies.

The buyer is overseas. Does the recovery process still work?

For UK‑registered buyers the procedure is straightforward. For overseas buyers, the Late Payment Act may not apply (it depends on the governing law of the contract), and enforcement requires foreign court proceedings or recognition of a UK judgment abroad. We assess these matters case by case.