Listening to payment excuses is one of the most frustrating parts of running a business. While excuses are inevitable, understanding the common ones and knowing how to address them effectively can save you time and protect your cash flow.
Timely payments are essential for a business to function, and chasing overdue invoices diverts valuable resources from other priorities. Having a clear credit policy in place can help you manage late payments efficiently. Below, we explore common excuses for non-payment and strategies to address them.
1. “We didn’t receive the invoice.”
This is one of the most frequent—and often genuine—excuses for late payments.
How to Handle It:
- Preventive Action: Reach out to the customer via email or phone before the invoice due date to confirm they’ve received it.
- Use this opportunity to build rapport with the customer and gather helpful information, such as their typical payment schedule.
- Always ensure invoices clearly state payment terms and due dates to avoid confusion.
By proactively following up, you can eliminate this common excuse before it arises.
2. “We’ll pay once our customer pays us.”
Some customers may claim they need to wait for payments from their clients before settling your invoice.
How to Handle It:
- Stick to Agreed Terms: Remind them of the agreed payment terms.
- Enforce Deadlines: If payment is overdue, you may charge interest under the Late Payment of Commercial Debts (Interest) Act 1998.
- Offer Installments as a Last Resort: If they truly can’t pay in full, suggest an installment plan. However, be cautious, as this increases the chances of missed payments.
Ultimately, the responsibility for payment lies with your customer, regardless of their cash flow issues.
3. “The person who approves payments isn’t available.”
A business doesn’t stop functioning just because one person is unavailable.
How to Handle It:
- Request to speak to a senior staff member or someone authorized to process payments.
- Politely remind them that interest charges may accrue on overdue payments, which could encourage them to find a solution quickly.
Having backup payment approvers within their organization can prevent this excuse from delaying payments.
4. “I didn’t realise the payment date was due.”
Some customers may claim ignorance about the due date or payment terms.
How to Handle It:
- Clearly discuss payment terms before the sale is finalized.
- Include explicit due dates on invoices rather than vague terms like “net 30 days.”
- Follow up with a courtesy reminder a few days before the payment deadline.
A precise and transparent approach makes it harder for customers to claim they didn’t know when payment was due.
5. “Our systems are down.”
While system failures can disrupt operations, they rarely make payments impossible.
How to Handle It:
- Suggest alternative payment methods, such as mobile banking or visiting a local bank branch.
- Reiterate that interest charges may apply for late payments.
Most customers will find a way to make the payment if they have the funds available.
6. “We have a dispute about the invoice.”
Disputes are not uncommon and can be a legitimate reason for delayed payments.
How to Handle It:
- Request that the customer provides all details of the dispute in writing as soon as possible, preferably before the invoice becomes overdue.
- Address disputes promptly to resolve the issue before the due date.
- To prevent future disputes, follow up with customers after sending invoices to ensure they’re satisfied with the product or service and the amount billed.
Proactive communication can reduce the likelihood of disputes delaying payments.
Preventive Strategies to Reduce Payment Delays
While it’s impossible to eliminate payment excuses entirely, implementing these practices can significantly reduce their occurrence:
- Set Clear Payment Terms: Clearly communicate payment terms and due dates at the time of sale and include them on invoices.
- Follow Up Regularly: Reach out before and after sending invoices to confirm receipt and resolve potential issues.
- Enforce Policies: Stick to your credit policy and remind customers of the consequences of late payments, including interest charges.
By staying proactive and firm, you can protect your business’s cash flow and reduce the time spent chasing overdue invoices.
Timely payments are vital for your business’s success, and while excuses are inevitable, they don’t have to derail your operations. With clear policies and proactive communication, you can ensure your business remains financially healthy.