Chasing invoices across multiple entities in the same corporate group

Dealing with large corporate clients can feel like a major win for a small business, but it can also bring a unique set of frustrations when it's time to get paid. One of the most common and confusing issues is navigating the complex web of a corporate group. You do the work for a well-known brand, but your invoice gets bounced between "UK Trading Ltd," "Global Holdings PLC," and "Group Services LLP," each claiming the other is responsible.

This isn't just an administrative headache; it can be a deliberate tactic to delay payment and frustrate creditors. Understanding the structure of corporate groups and the critical importance of billing the correct legal entity is not just good practice—it's fundamental to protecting your cash flow. This article will break down how these structures work, the games some companies play, and the practical steps you can take to ensure you get paid.

What is a Corporate Group? A Quick Primer

At first glance, a "brand" like "Acme" might seem like a single, monolithic entity. In reality, it's often a collection of separate companies working together under a common umbrella. This is known as a corporate group.

A typical structure involves:

• A Parent or Holding Company: This company sits at the top. Its main purpose is often to own shares in other companies, rather than trading directly with customers itself. For example, "Acme Holdings PLC".
• Subsidiary Companies: These are the companies owned by the parent company. There can be many subsidiaries, each with a specific function. For instance, "Acme UK Sales Ltd" might handle customer relationships, while "Acme Manufacturing Ltd" produces the goods, and "Acme Properties Ltd" owns the buildings they operate from.
• Sister Companies: These are multiple subsidiaries all owned by the same parent company. "Acme UK Sales Ltd" and "Acme Manufacturing Ltd" are sister companies to each other.

The single most important thing to understand is this: each of these companies is a separate legal entity.

This means that "Acme UK Sales Ltd" has its own legal identity, its own assets, its own liabilities, and its own board of directors. A debt owed by "Acme UK Sales Ltd" is not automatically a debt owed by "Acme Holdings PLC" or any other company in the group. This principle, known as "separate legal personality," is the bedrock of UK company law and the source of many payment headaches for suppliers.

The Golden Rule: Your Contract is With ONE Legal Entity

No matter how large the group or how famous the brand, your business relationship is not with the brand; it's with the specific company that legally engaged your services. The name on your contract, purchase order (PO), or written agreement is the only entity legally responsible for paying your invoice.

Identifying this entity correctly from the very beginning is the most crucial step in the entire credit control process.

How to Identify the Correct Legal Entity

Before you do any work, you must have clarity on who, precisely, you are working for. Here’s what to look for:

1. The Full Company Name: Look for the full, official name, which must by law end with its designation. This will be "Limited" or "Ltd," "Public Limited Company" or "PLC," or "Limited Liability Partnership" or "LLP." A brand name like "Acme" is not a legal entity. "Acme UK Sales Ltd" is.
2. The Company Registration Number (CRN): Every company registered in the UK has a unique CRN. This is the definitive identifier. Ask for it. It should be on their official documents.
3. The Registered Office Address: This is the company's official legal address, which may be different from the trading address where you perform the work.

By law, all UK companies must display their full legal name, CRN, and registered office address on their business letters, order forms, and websites. If you can't find it, ask for it. If they are evasive, treat it as a major red flag. You can verify all this information for free on the Companies House website.

Common Ways Group Structures are Used to Delay Payment

While some payment issues are genuine administrative errors, sophisticated debtors can use their complex group structure as a tool for "strategic" payment delays. Here are the most common tactics to watch out for.

The "Wrong Entity" Shuffle

This is the classic move. You complete the work for "Acme Widgets," as instructed by your contact, Bob. You send your invoice to "Acme Widgets Ltd" as per the details on their website.

Weeks later, after chasing, their accounts payable (AP) department replies: "Apologies, but this invoice has been rejected. All supplier invoices for this division must be made out to 'Acme Group Services LLP'. Please cancel your original invoice and re-issue a new one to them."

This is incredibly frustrating because:

• It resets the clock. Your payment terms (e.g., 30 days) start again from the date of the new invoice. You've just given them an extra 30-60 days of free credit.
• It creates admin for you. You have to cancel the old invoice in your accounting system and create a new one, adding to your workload.
• It can be a lie. Sometimes, the original entity was correct, and this is just a delaying tactic to see if you'll fall for it.

The "Internal Recharge" Excuse

Another common line is, "We can't pay you yet because we haven't been paid by our parent company." You might hear something like, "The budget for this project sits with Acme Holdings PLC, and they haven't transferred the funds to us, Acme UK Sales Ltd, so our hands are tied."

This is their internal problem, not yours. Your contract is with "Acme UK Sales Ltd." How they fund their operations, whether through their own revenue or via inter-company loans, is irrelevant to their legal obligation to pay you on time. Do not accept this as a valid reason for non-payment.

The "Shell Company" Risk

This is a more serious and predatory tactic. A group might set up a subsidiary with very few assets specifically to engage with suppliers. This company, let's call it "Acme Project Co Ltd," might have a famous brand name but be deliberately under-capitalised.

You do £50,000 worth of work for them. They fail to pay. When you investigate, you find "Acme Project Co Ltd" has no money, no property, and its only asset was a small bank account that is now empty. Meanwhile, its parent company, "Acme Holdings PLC," is sitting on millions in assets.

Because of the separate legal personality rule, your claim is only against "Acme Project Co Ltd." If it has no assets, you can get a court judgment against it, but there's nothing to enforce it against. The company is simply put into liquidation, and you, as an unsecured creditor, will likely get nothing. The parent company has no automatic liability.

Proactive Steps: How to Protect Yourself Before Invoicing

Prevention is always better than a cure. A few disciplined steps at the start of a relationship can save you months of chasing and thousands of pounds in lost revenue.

1. Rigorous Onboarding: Before starting any work, get a formal purchase order or a simple signed contract. Scrutinise it to ensure the full legal name and company number of the entity you're contracting with are clearly stated.
2. Companies House Check: It takes two minutes and it's free. Look up the company on the Companies House service. Check its filing history. Are its accounts overdue? Have a lot of directors recently resigned? These are warning signs. You can also see if the company is active or at risk of being struck off.
3. Clarify Invoicing Details in Writing: Send a simple email before you begin: "Just to confirm for my records, please could you verify that the correct legal entity for this contract is [Company Name Ltd, CRN: 12345678] and that invoices should be addressed to [Full Address] and sent to [ap@email.com]?" Getting this confirmed in writing makes it much harder for them to play the "wrong entity" game later.
4. Consider a Parent Company Guarantee (For Large Contracts): If you are entering into a very large contract with a subsidiary, you can request a Parent Company Guarantee (PCG). This is a formal legal document where the parent company agrees to meet the subsidiary's obligations if it fails to pay. This is a serious legal step and will require a solicitor to draft or review, but for a high-value project, it completely removes the "shell company" risk. The group's willingness (or unwillingness) to provide a PCG tells you a lot about their confidence in the subsidiary.

Reactive Steps: What to Do When They Play the Group Game

If you're already in a situation where a corporate group is giving you the runaround, you need a clear plan of action.

Step 1: Stand Your Ground (Politely but Firmly)

If they ask you to re-invoice a different entity, don't just roll over. Push back professionally.

Reply with: "Thank you for the information. My agreement and purchase order [PO# 12345] are with 'Acme Widgets Ltd'. To change the billed entity would require a formal contract amendment and a new purchase order from 'Acme Group Services LLP' to reflect this. Could you please arrange for that to be sent over? Otherwise, invoice [Invoice# 101] remains payable by 'Acme Widgets Ltd' as per our original agreement."

This does two things:

• It calls their bluff. If it's a real administrative requirement, they should be able to produce the new paperwork.
• It shows you are professional and won't be easily fobbed off. Often, faced with creating more admin for themselves, the AP clerk will find a way to "exceptionally" process the original invoice.

Step 2: Formalise and Automate Your Chasing

Don't let the confusion stall your credit control process. The clock is still ticking from the original due date. Your standard process of reminder emails should continue, directed at the correct legal entity you originally billed.

This is where automation becomes invaluable. Manually tracking different threads of conversation across multiple entities is time-consuming and prone to error. Using a tool like InvoiceReminder, which connects to Xero, QuickBooks, Sage, or FreeAgent, ensures your scheduled sequence of reminders (friendly, firm, final notice) goes out consistently to the right contact, regardless of the excuses you're being given. It maintains pressure and creates a clear paper trail.

Step 3: Escalate Within the Group

If the AP department of the subsidiary is stonewalling you, it's time to escalate. Don't just keep emailing the same generic accounts@ address. Use LinkedIn or the company's website to identify a more senior person, such as the Financial Controller or Head of Finance for either the subsidiary or the parent company.

Send them a concise email: "Dear [Name], I hope you can help. We have an overdue invoice (#101) with your subsidiary, 'Acme Widgets Ltd', for work completed on [Date]. We seem to be facing some internal confusion regarding processing and I'm struggling to get a clear answer from the AP team. Could you possibly point me towards the right person to get this resolved?"

This approach is non-confrontational and frames you as someone trying to solve a problem. Senior managers dislike seeing their group's reputation damaged by inefficient internal processes and will often intervene to get things sorted.

Step 4: Use Your Statutory Rights

When polite chasing and escalation fail, you must be prepared to enforce your rights under UK law. The Late Payment of Commercial Debts (Interest) Act 1998 is a powerful tool for B2B transactions.

For most UK business-to-business contracts, you are entitled to add:

1. Statutory Interest: This is currently 8% plus the Bank of England base rate. This is a significant rate that gets their attention.
2. Fixed Compensation: This is a one-off charge per overdue invoice to cover your recovery costs.

The amount of compensation you can claim is set by law and depends on the size of the debt:

Debt Size (per invoice)	Fixed Compensation Payable
Up to £999.99	£40
£1,000 to £9,999.99	£70
£10,000 or more	£100

Your final notice before legal action should state the original invoice amount, plus the accrued statutory interest to date, plus the fixed compensation fee. Crucially, any legal action, from a Letter Before Action to a Money Claim Online (MCOL), must be addressed to the correct legal entity you contracted with. Suing the parent company by mistake will get your claim struck out.

A Note on "Piercing the Corporate Veil"

You might wonder, "Can't I just sue the directors or the rich parent company if their subsidiary is a sham?" The legal concept that prevents this is called the "corporate veil," which separates the company's liabilities from its owners (the shareholders).

In very rare circumstances, a UK court can "pierce the corporate veil" and hold shareholders (like a parent company) liable. However, this is exceptionally difficult and usually reserved for cases of serious fraud where the company structure was deliberately used to evade a pre-existing legal obligation.

For a typical small business supplier, it is not a realistic or cost-effective option. You must operate on the assumption that you can only ever pursue the specific legal entity you have a contract with.

Frequently asked questions

What's the easiest way to find a company's correct legal name?

The best way is to use the free search function on the UK's Companies House website. You can search by the brand name, and it will show you all registered companies with similar names. The correct one will have a full legal name (ending in Ltd, PLC, etc.), a company registration number (CRN), and a registered address that you can match against your paperwork.

Can I charge late payment interest if they make me re-invoice a different group company?

Yes. The payment clock starts from your original invoice's due date, assuming it was sent to the legal entity specified in your contract or PO. The request to re-invoice is a form of administrative delay on their part. You are entitled to claim statutory interest for the entire overdue period, starting from the original due date.

I did work for a brand, but the purchase order came from a "shared service centre" company. Who do I sue if they don't pay?

You must pursue the legal entity named on the purchase order. The PO is your contract. If "Acme Group Services LLP" issued the PO, they are your legal counterparty and the entity you must invoice and, if necessary, take legal action against, even if the work was for the "Acme Widgets" brand.

The subsidiary I billed has no money, but the parent company is huge. What can I do?

Unfortunately, without a Parent Company Guarantee, your legal claim is almost certainly limited to the subsidiary company. If that company has no assets, it may be impossible to recover your money, even with a court judgment. This highlights why conducting due diligence before you agree to do the work is so vital.

My main contact has moved to a different company within the same group. Who do I chase for payment?

Your relationship is with the company, not the individual employee. You should continue to chase the accounts payable department or a finance manager at the company you originally invoiced. Do not follow the employee to their new role in a sister company, as that entity has no legal obligation to pay the debt.

Get your process right, every time

Navigating corporate group structures is a masterclass in the importance of diligence. Getting the legal entity right on day one is the single most effective thing you can do to prevent payment delays. When chasing, a firm, consistent, and documented process is key to cutting through the confusion and excuses.

Manually managing this process, especially when dealing with evasive debtors, is a significant drain on your time and energy. InvoiceReminder is designed to put this on autopilot. By connecting to your accounting software, it automates the sending of reminder emails according to a schedule you control, ensuring that the pressure is maintained professionally and consistently. You can currently set up unlimited email reminders at no cost. InvoiceReminder is built for UK freelancers, small businesses, and accountants by the team behind WeCovr, a firm which has arranged over 1,000,000 insurance policies in the UK and is authorised and regulated by the Financial Conduct Authority.