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Debt Recovery for Festival Suppliers and Contractors

Andy Robertson

As rising costs and other factors affect the festival sector some organisers are choosing to cancel their events. In the worst circumstances organising entities may go into receivership owing money to suppliers. What can companies supplying service to the festival sector do to safeguard against potential problems.  


Some festival organisers have poor financial control and payment of invoices can take too long for the suppliers owed money. If a festival gets cancelled because the organiser has run out of funds and gone into receivership recovery of any debt can be particularly challenging. If a festival organising entity is a limited liability company that goes into receivership with debts the assets will be sold and the money split between all creditors. As long as there is no proven fraud and the Directors acted in good faith, the Directors are not personally liable for any debts the festival company incurred. Not all creditors are equal and if there any recoverable assets it is the government tax office that gets paid first. 

Who Losses Out When a Festival Organiser Goes Bust Before the Event Date.
If a festival organisation has been struggling financially with no solution in sight, it can be placed in the hands of creditors and wound up by means of a formal insolvency procedure (receivership), where a creditor takes control of a business and its assets with the intent of liquidating them. If this does happen to a festival organising entity the creditors can be many and varied and are likely to include vendors and sponsors who lose any deposits made along with volunteers that submitted small deposits direct to the festival. Ticket buyers may not get their money back but many will be covered by insurance and probably get something back. The biggest losers will be the numerous suppliers and contractors who have already provided services to the festival.

Due Diligence. 
For any contractor or supplier of services it is prudent to make checks on the financial standing of the festival including existing liabilities and their ability to pay any bills prior to engaging them in business. Making contact with other suppliers may also reveal what the festival organisers are like to deal with and how good they are at paying their bills.

Supplier Proforma Invoices, Deposits and Late Payments.
If suppliers have any doubts about the festival entity, they can always provide services on a proforma basis where the costs of services are paid up front before provision of services. As most organisers rarely have great liquidity obtaining any prepayment can be difficult. If it is a well-known festival with a good reputation the supplier may take the risk and supply services with just a deposit and an agreement to invoice at the end of the event. Even applying a 30-day payment window does not guarantee the organiser will pay their invoice on time. Suppliers in the UK can use the Late Payment of Commercial Debts Act 1998, that entitles them to claim compensation and interest at 8% above the Bank of England's base rate on each late paid invoice. As a last resort suppliers can use a factoring agency where the unpaid invoice is sold to a third party who then make their own arrangements to recover the debt. Although the supplier will get cash immediately the factoring agency could take 5% of the total value. 

For festival organisers planning their events using a software management platform like Festival Pro gives them all the functionality they need manage every aspect of their event logistics. The guys who are responsible for this software have been in the front line of event management for many years and the features are built from that experience and are performance artists themselves. The Festival Pro platform is easy to use and has comprehensive features with specific modules for managing artists, contractors, venues/stages, vendors, volunteers, sponsors, guestlists, ticketing, cashless payments and contactless ordering.

Photo by Kindel Media via Pexels

Andy Robertson
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