How to deal with late payment excuses
As a debt collection agency, our team has probably heard more excuses than most as to why an invoice hasn’t been paid.
From holidays and power cuts to the old favourite – “the cheque is in the post” – there are so many excuses a customer can come up with to stall on paying what’s owed. The problem is that the vast majority could be genuine reasons. But there are ways to diplomatically find out whether they are telling the truth.
1. “We haven’t received your invoice” / “We’ve misplaced your invoice”
There are two important steps to take here. First, confirm whether this is the only reason why the invoice hasn’t been paid. The second is to send a copy invoice immediately. Many businesses still choose to send invoices via the post which not only costs money, but also delays the payment process and can lead to these sorts of excuses. Instead, ensure that invoices are either sent via email or fax. To avoid this late payment excuse altogether, call your customer immediately after sending the invoice to confirm receipt. This will also give you the chance to verbally confirm acceptable payment methods and the due date, and your customer the opportunity to check the invoice is correct.
2. “I’m disputing part of the invoice”
There is an obvious solution to this one, but it’s often missed as businesses make getting to the bottom of the dispute the priority. Instead, first ask that the undisputed part of the invoice is paid immediately. This will not only indicate whether it’s a valid excuse, but also ease the cash flow pressure on your business that’s caused by the delay. Then focus can be shifted to resolving the dispute.
3. “Our systems are down”
This is an example where it can be useful to offer a range of acceptable payment methods. Access to internet banking may well be difficult for them, but there’s no excuse for your customer not to send a cheque in the meantime. If they resist, they’re probably not telling the truth. It’s also advisable to ask whether these are common problems. If so, they might know how long it usually takes for them to be fully operational once more.
4. “My director’s on holiday”
This is one of the most popular late payment excuses we hear, but it is rare that a company director tasked with approving payments wouldn’t make any provisions in their absence, particularly with regards to wages and utility bills. The first thing to do is to ask what these provisions are, and then reaffirm the importance of your invoice and your relationship with the business.
5. “The cheque is in the post”
Ah yes, this old chestnut. The simple response should be to ask for the cheque number and the postal date, whilst checking that they have your correct company address. If cash flow is particularly tight however, ask them to pay by BACS transfer or by direct debit to speed up the process. To avoid this late payment excuse altogether in the future, don’t offer payment by cheque as one of your acceptable payment methods – particularly given how long a cheque takes to clear.
Credit control can be a difficult process for businesses, but the best advice is to learn from past experiences and to maintain a regular dialogue with customers, so that any issues can be identified with enough warning to plan for the impact a late payment will have.
For more top tips, visit our credit control tips section to check that your business is doing all it can at each stage of the order-to-collections process to reduce the threat of late payment.