What are the best excuses you have heard from your customers on why they haven't paid you?
This week we are going to look at some of our favourite excuses we have heard over the years and how best to deal with them.
Be sure to check back every day
Probably the most common excuses are always around paperwork and can include;
"we can't find the invoice",
"we never got the invoice",
"there is no order number on the invoice",
"we only pay on statement - can you send us one",
"the invoice wasn't detailed enough - we don't know what we are being asked to pay for"
The short term solution to this is to accept the excuse and make sure the customer gets what they need. If you can email the invoice or statement to them as you have them on the phone and ask them to confirm receipt. You may need to alter the description on the invoice to ensure that it has sufficient information and has the correct order number etc.
In the long term you need to make sure that your invoices are perfect before they leave your system. Always make sure that the invoices have all the necessary detail, have the correct order number, contact details, bank details, vat details etc. If possible email your invoices and statements and try to use read receipt functionality to confirm that the invoice was delivered and opened by the recipient.
This is an excuse that a customer should only really be able to use once or maybe twice, if they are using it more than that then it is an indication that your invoicing process need to be looked at (particularly if this excuse is being used by multiple customers)
The other most common form of excuse is where the customer doesn't despite the actual invoice, but instead blames their internal systems for the delayed payment, so excuses like
"The invoice was received but hasn't been approved yet"
"There is no one available to sign cheques/authorise payments"
"Our computer system is down, we can't make any payments"
These are the worse types of excuses, simply because they are outside of your control, they are your customers issues, not your's, consequently there is very little you can do to fix them. They are also quite weak excuses as most businesses make allowances for signatures to not be available for payments (such as having some pre signed cheques for example)
In the short term you just have to accept them. But they should only be short term excuses, in other words excuses that only account for a delay of a couple of days to a week at most. So accept the excuse but follow up within a couple of days for an update.
If a customer constantly use these types of excuses, then this need to be tackled. Its pretty inconceivable that a company could legitimately operate without the ability to pay its suppliers due to lack of signatures or systems failure.
Another typical excuse from a customer is that they either did not agree to your credit terms or were not made aware of your credit terms - and as such will only pay you on their terms - which obviously will be much later than yours, potentially turning 30 days to 90 days!
In the short term you need to figure out if you indeed failed to notify them of your credit terms and you just assumed they would pay within 30 like everyone else. Did you get them to sign a credit application form https://www.creditcruncher.io/blog/are-they-worthy where you highlighted your terms and insisted that the customer signed as a confirmation of accepting them? Did you make sure that the person that signed had sufficient authority to agree to your terms? When you issued your invoice did you include a copy of your terms and conditions of the sale (incorporating your credit terms?).
If the answer to these questions are NO - then unfortunately you are at fault here and need to make the necessary actions to try and enforce your terms going forward. If however your answer to these questions is YES - then you need to enforce your terms and not accept the customers terms, after all they agreed to accept your terms on their original application!
NB there are some exceptions to the payment terms whereby they are dictated by local legislation or mechanisms such as the application of late interest charges as a means to encourage payment within acceptable terms.
This is an excuse that can happen all too easy. Your customer may have been waiting for a large payment to come in from one of their customers that might not have been paid and now they find themselves short of cashflow.
In the short term you need to assess if this is a genuine excuse and the only real way to do this is by talking to the customer to get a sense of how genuine they are. If they are genuine and are a generally a good customer then it is in everyones best interest to work together to resolve the payment issue.
The first step is to try and get some part payment from the amount outstanding. This may help you with your cash flow and it also shows your customers willingness to resolve the issue. The next step is to put in place some form of a payment plan to get the rest of the outstanding amount. This may be either extending the credit term by another month to see if the issue resolves itself or it may be setting up a new agreement whereby the customer agrees to pay a smaller amount each month until the outstanding amount is paid in full.
Seriously its 2020.....who still pays by cheque?
In the short term if your customer still pays you by cheque and uses this excuse I would ask for a copy of the cheque details for your records (i.e. cheque number, date etc). If the customer has actually raised and posted the cheque then they should have these details to hand and should be able to supply them immediately.....if not....then they there is a pretty good chance they lied to you.
In the long term, if possible, move the customer from payment by cheque to payment by bank transfer or even better payment by direct debit!
photo credit: Lukas on Pexels