Dealing with late payment excuses
Dealing with Late Payment Excuses
Getting clients to pay what they are due and on time is proving difficult for many business owners, and with that comes a variety of excuses clients present for the late payment.
Although many may be a genuine issue, it may just be an excuse so it is essential to uncover ways of working together to help reach a solution and receive payment.
Below we have listed the four most common late payment excuses and how you as a business owner should act to assist in recovering payment.
The Supply Chain Effect
Businesses are commonly run as part of a supply chain, therefore when a supply chain partner faces financial difficulties, the issues run along the chain.
General excuses when the supply chain effect happens are, “We don’t have the money due to cash flow problems”, or “I can’t pay you until my clients pay me”.
If the reason is due to a cash flow problem you will need to acquire more information to what caused the problem.
You need to establish if it is a temporary problem which will be resolved or if it will affect the discharge of the rest of the outstanding payment.
If it is temporary or they can’t play due to client payment issues a simple solution would inform them that you understand their situation and to enquire when they would they will have the money and reach an agreed date to pay by.
Some businesses may use the excuse that the ‘the authorised signatory for the cheque is not in the office/or on holiday’ or that they only pay invoices one every month.
In the case of many small businesses, the owner will want to sign all cheques being made. If the authorised signatory is on holiday, you could enquire if there are any pre-signed cheques available that could be used to make payment.
If not, establish when the authorised signatory will be back in the office and make sure you follow up on the payment that day.
If the company only pay invoices every month, make sure that you politely re-iterate the payment terms and conditions which they signed and agreed to regarding the due date for payments. Once this has been established arrange with the client a date in which the payment will be made.
A very common delay tactic used is that the client has not received the invoice. The best way to take action to a client who claims they never received an invoice is to have a copy ready to go and offer to fax or email it to them immediately, while they are still on the phone with you. Once you have confirmation they have received the invoice, agree with the client when the payment will be made.
It is always best to work together with your clients to figure out a solution, however, if the client reputably uses excuses you may want to consider alternative methods. Federal Management is widely regarded as the top solution and the best debt collection agency. This is backed up by high recovery rates and being the most accredited, multi-award-winning agency in the UK.
Complaint/ or Disputing
To avoid or gain a reduction in their payment, a small minority of customers will spuriously complain or dispute about the product or service they received. It is one of the oldest tricks in the book used by the unethical.
Regardless, it could be that your client may have a genuine claim here, however not if the delivery was over a few weeks ago, question why they have not contacted you to discuss and sort out the problem at the time the delivery was made.
Ensure the client that an investigation will carry out for the complaint/dispute but request payment for the balance until it has been dealt with. Act promptly to resolve any complaints/ disputes so any invoices can be cleared as soon as possible.
Sometimes, customers may complain about your product or service in order to receive a reduction on their bill – or avoid paying altogether. If you believe their complaints are not genuine and are being used tactically, there are different approaches you can take.
When a client’s payment is late, the earlier you contact that client to determine the reason, the quicker you can come to a resolution that suits both parties. Keep lines of communication open and clear and you’re more likely to receive the payment.
Business late payment is the silent killer for thousands of businesses across the United Kingdom. Do not let your business be a victim. Get free, expert advice today and speak with our friendly New Business Team for advice on our Multi-Award Winning B2B Debt Collection services.