Overdue Invoices – Top 10 Excuses Debtors Will Use
Overdue Invoices – Top 10 Excuses Debtors Will Try To Use
Every business has experienced issues related to clients withholding payment. Overdue invoices are often a constant headache for business owners. After providing goods or services to a client, it is only right that you should be paid. Having a client delay on payment can be extremely frustrating and burdening.
Most businesses have a late payment and credit control process to handle the matter. This often involves chasing the debt through emails, phone calls or letters. In other cases, it is common for companies to add late payment interest charges on their invoices.
Regardless of the circumstances, every company knows that it is important that their invoices are paid on time.
In cases where a client is refusing to pay outright, it is beneficial to instruct a debt collection agency. Using proven processes, they will be able to enforce the collection of a debt and ensure that your company is not left short-changed.
We have recovered millions of pounds worth of debt resulting from overdue invoices. During that time, we have heard all manner of excuses from determined debtors. Sharing this knowledge can help businesses to recognise the warning signs of a client who is not going to pay.
Top 10 Excuses for Not Paying Overdue Invoices
There are countless tactics a debtor will try to use to avoid paying an overdue invoice. Here are some of the most common we have encountered.
1. Invoice Already Paid
Sometimes, debtors will claim that the invoice has already been paid. Obviously, this is false and is only meant as a delaying tactic by the debtor.
If your client is claiming that they have already paid, ask them for evidence of this. This could be in the form of a bank statement, the payment method they used, or proof that the amount has left their business’s account.
Occasionally, debtors may claim that a cheque was sent but was lost in the post. In this case, you should request the cheque’s number and due date, as well as provide alternative payment options that are instant.
2. Invoice Payment Disputes
Another common reason for unpaid invoices is that the client is disputing them. If there is a dispute, the client must inform you in writing as soon as possible. It is common for this not to happen, and the alleged dispute is just an attempt at delaying payment.
When facing an invoice dispute, you should ask the client for the date when they raised the dispute.
3. “The accounts department has left for the day”
This is a very common excuse that credit control teams and debt collectors hear a lot. Again, this is simply a delaying tactic, and the people that use this are perfectly happy to have you chasing payments forever.
If a debtor is using this excuse, you should instead ask to speak to someone else in a position of authority. Don’t forget to make a record of any conversation and follow up each one with an email or letter.
4. The invoice has not been received
If your debtor is claiming that they have not received an invoice, it is often a spurious claim.
The best way to prepare for this is to take steps in advance. For example, when you use an email, confirm that you have attached the invoice and that the subject line clearly makes reference to what it is. You should also add a read receipt to your message.
If you are sending your invoice through the post, you should always send it via recorded delivery.
As well as this, follow up each invoice with payment reminder phone calls (also make a record of this). If your debtor tries to claim that they didn’t receive the invoice, you will be able to tell them when it was delivered to and who accepted it.
5. “I am awaiting payment from my customer before I can pay you”
This excuse is unacceptable and could be a concerning sign. For instance, they may be simply trying to delay payment, or they could be facing cash flow issues themselves.
If this is the case, it could be a good idea to suggest that they make a smaller payment now (part payment) rather than the full amount.
6. Making the invoice payable to a different business
This is not unusual, but you should always perform due diligence on the new company before issuing an invoice.
In some cases, debtors have deliberately chosen a company that is on the verge of bankruptcy.
If a client asks you to do this, always request a reason for doing so.
7. The person you need to speak to is not available
Many credit control teams have ended up chasing their clients forever and have gone round in circles because of this.
If your debtor is continually claiming that the person you need to speak to regarding an outstanding invoice is unavailable, it is best to speak to a debt collection agency.
In many cases, as soon as an escalation like this is done, the person will suddenly become available.
8. We operate using different payment terms
There are several different standard payment terms that UK businesses normally operate on. These are commonly either 30 or 60 days, with some that operate on 90.
Despite what a debtor may say, normally payment is made according to the supplier’s terms, not the other way around.
If your debtor is arguing that they will only pay however and whenever they want, you should cite your payment terms documentation to them, as well as any payment dates on the original invoice.
9. We are changing banking systems
If your client is claiming that they are changing banks, then you should naturally question this. It is appropriate to ask for proof of the move.
Whilst changing banks is considered a time-consuming process, in reality, it is often very quick. In most cases, it only takes a few days, and you should contact your debtor afterwards with a new payment reminder.
10. The company is in administration
It is not unheard of for debtors to use this excuse to get out of paying what they owe. If it is true, they should be able to provide you with proof. If it is, they will be able to refer you to the liquidating company that is handling the case.
Recovering Overdue Invoices – Instructing a Debt Collection Agency
There are many more excuses that debtors will use to avoid making a payment. A determined debtor will go to any length to get out of paying. The main priority is that your business successfully receives payment for what it has provided.
Are you having issues with overdue invoices? Are your invoice emails being ignored? If so, speak to Federal Management today.