When you provide a product or service to a customer, you expect that they will pay you promptly when they receive it. Unfortunately, most business owners quickly learn that some customers do everything they can to avoid paying on-time, offering up excuses for why you haven’t received your money yet. If you are a business owner, this has most probably happened to you already. If it hasn’t yet, it will.
Here are a few of the most common excuses that customers give for not paying on time, what to do about it, and how to find a solution to prevent future late payments.
#1. “We haven’t gotten the bill yet”
This is perhaps the most common excuse given to justify the fact that you haven’t been paid yet. After all, if they don’t know how much they owe you, how can they pay you? If you set up your invoicing system well, this isn’t likely to be possible, let alone probable. If you manage to set up all of your billing and payment systems electronically, there shouldn’t be a question; there will be a log of activity you can refer back to.
If you’ve gotten this excuse, there are a few things that you can do. Promptly issue a new invoice. If you send a paper bill, you can make a trip to the post office to send it via certified mail. If the customer has to sign for it, they can’t say they didn’t receive it. Even better, send it via email with a strict due date and request a confirmation that the email has been received.
To prevent customers from using this excuse in the first place, make sure that you use electronic billing systems that automatically send out a payment due to reminder a week after the invoice was sent. This makes it much harder for customers to claim that they weren’t aware of the bill. If they try to use this excuse, you can show them when it was sent.
#2. “Our Accounting Manager is Out of the Office”
Claiming that the person authorized to review the invoice and make the appropriate payment is gone from the premises is another common tactic used by customers to avoid paying their bills. A reputable business would have a contingency plan in place for when a critical employee is on leave, and even a plan for emergencies if something were to happen to that individual.
The first thing you should do is request details. When will the person be back? How can you reach that person when they return? If they stumble over these answers or come up with more excuses, you can bet they’re just buying time. Keep pushing until you have received a firm date that you can reach out, and then flag it for follow up immediately.
Preventing these types of problems is best done by developing good working relationships with your customers. When you set up your contracts, make sure that you know who you will need to speak to about financial matters, so that you can reach out to them directly when there is a payment issue. It’s very difficult for them to answer the phone and then claim they aren’t in the office.
#3. “We’ve already sent the payment”
This is a quick way to buy time. You can’t possibly be upset with them if they’re telling you that they’ve already paid, can you?
This is another situation where asking for details can be helpful. If they’ve truly sent the payment, they will have a record of the check number and the amount, as well as the date that it was paid. If they can answer those questions for you, give them the benefit of the doubt and wait a few more days. If they can’t, ask to speak with someone who can help you resolve the problem.
You can eliminate these issues by utilizing a billing service that allows for payments to be made electronically. They can be set up to accept e-Checks as well as business credit cards, so there should be no reason for a delay in payment.
#4. “Our client hasn’t paid us yet”
When you’re working in a B2B situation, there can be a chain of cash flow problems that end up at your doorstep. However, cash flow problems are something that a good business should plan for.
Ask your customer when they think they will be able to pay. Once you have an answer, ask them how short of the total they are. Then, you can request that they pay a portion now and that you will reach out to them at the agreed upon date for the remainder of the payment.
One way to prevent this is to work through a 3rd party billing department. They can follow up with your customer and may be able to arrange automatic payment plans so that this doesn’t happen again. You can also request that your customer now needs to pay a deposit in order to keep their account open. This way, if they fail to pay the invoice on time, you can draw from the deposit to cover your bills.
#5. “We never received the product”
Claiming that they don’t owe you the money because they haven’t received the goods is another way that customers can try to avoid payment. This is more often the case with a one-time purchase, rather than a long-standing client.
Double check your records for important details like delivery confirmations and verify that they likely did receive the product. Explain that you have a confirmation showing that it was received at a specific date and time and inquire as to whether or not someone else may have received it. If they still claim that they didn’t receive it, ask your shipping company to look into it.
The best way to do prevent future occurrences is to require that deliveries be signed for upon receipt. That way, you have a record of the date and time that the product was received, and the name of the person who signed for it.
Dealing with customers that continually fail to pay on time can be frustrating, but by following the above tips you can stay ahead of the problems. If you continue to have problems with a particular customer, you might consider letting go of the contract.