Listening to payment excuses from customers is undoubtedly a very frustrating part of the business cycle. It is essential to buckle down on the frequent excuses and understand how they can be dealt with.

Businesses need a regular cash flow to effectively function, and by spending your valuable time chasing invoices it takes you away from other important functions of your business. Upon an invoice being overdue, your credit policy should outline the process you take when circumstances like this arise.

Please see below some frequently made excuses and how they can be dealt with.

We don’t have the invoice

• As one of the most common excuses for late payment, it is often also a genuine one.
• This can be combated prior to you having to chase the customer, simply by checking up on the customer via an email or phone call before the due date of payment.
• During this instance of communication, you can build on the relationship you have with the customer, whilst also gaining further useful information such as when the customer is going to be sending the payment, and (for a B2B relationship) when their payment run generally occurs during the month.
• This way you can always be certain that you are ahead of the most common excuse for non-payment of an invoice.

I will send payment once my customer has made payment

• Despite what your customer may say in regards to waiting for a payment from a customer of their own, they are still held to the terms agreed during your negotiations prior to using/purchasing your service/product.
• To avoid this, ensure that a deadline date is agreed with the customer in writing.
• Advise your customer that should the payment surpass the deadline date, then you may begin to charge them interest, as per the Late Payment of Commercial Debts (Interest) Act 1998.
• If your customer is clear that they will be unable to pay on the date set, then you could suggest to be paid in instalments until the debt is paid in full or until a payment in full can be made – we would advise this as a last resort due to the possibility of the instalment plan not being fulfilled each period; this gives the customer more chances for missing a payment.

The person who authorises the payments is not available

• We all know that a business cannot stop running just because a member of staff is on annual leave or is off due to sickness.
• That is why, if this excuse crops up, then you should always ask for a senior staff member to speak to.
• If that still isn’t enough then kindly remind them of the interest charges that continue to incur whilst the invoice is beyond terms – this may encourage them to find a way of making payment.

The payment date isn’t yet… is it?

• Whether your payment terms are 60 days, 30 days, 7 days or even upon receipt of the invoice, there will often be certain customers that will attempt to get an extension through ‘not being aware’ of the payment due date or terms.
• To counter this and cover you and your business, ensure that you discuss your payment terms prior to the point of sale with the customer and clearly state on your invoices your payment terms.
• Businesses often opt to put the precise date that the invoice is due by so that it gives the customer less excuses in ‘working out the date’ that payment is due on.
• Unless stated otherwise, all invoices have terms of 30 days, but it’s always better to be safe and stick them on your invoices!

Our systems are down!!!

• So what? Yes, it can be agreed that having your entire internal systems go down will put huge strain on the business at that particular moment, whether it be the internal systems, the internet, the bank accounts. However, it doesn’t mean that it’s impossible.
• There is realistically no viable excuse which will mean that a customer cannot pay if they have the money.
• Mobile banking makes getting around this a whole lot easier, and even if this is disputed, then ask them to pay by going into their local branch and 9 times out of 10 they should be able to make payment.
• It is also wise to (again) remind them of the interest that could be charged to their account, should payment not be made on the due date.

Disputes – We are not going to pay this because…

• A dispute or two does not go unheard of.
• If a customer is disputing an invoice of yours, and is not paying you because of it, request all details of the dispute in writing, ideally prior to the invoice becoming overdue. This way a solution can hopefully be provided by the time that the payment is due.
• To minimise disputes going forward, take some time to call the customer after sending them the invoice. Make sure that they have seen the invoice, and that they are happy with the product or services that have been provided for the invoice amount. This way you are more likely to prevent there being issues of non-payment when the due date approaches. (It may also be wise to ask for a payment date from the customer during this phone call so that you can ensure that you receive your money).

Ultimately there are always going to excuses being made when it comes to businesses providing a service or product. These methods act more as a preventative than a solution, so that hopefully more of your invoices can be paid on-time, meaning that the cash flow in your business is upheld.

For more information on how we can help you with your cash flow issues contact us today.

Published: 29th August 2023