Fair CapitalUpdated: Jun 28
Prepare yourself to deal with clients or customers who avoid or delay paying you with all sorts of excuses.
In this article, we will explore some common excuses and how to overcome them.
The most common excuses clients use for not paying-and what you can respond.
I haven’t received the invoice.
“I never received your invoice” - a widespread delaying tactic.
If a debtor denies receiving an invoice, confirm that this is the only reason they have withheld payment. Then, use a “closed” question and have them confirm receipt of the invoice will result in payment today.
Inform your customer you will send a copy immediately via email or their preferred method of communication. Once done, contact them, preferably over the phone, to check whether they’ve received the invoice and ask them to pay immediately. If your client still doesn't pay, you know they're just giving you the runaround. See; How to get clients to pay overdue bills?
Invoice errors.
Double-check what your customer stated. In case of errors, correct the invoice and change the due date. Then, send it to your customer by email, follow up with a phone call to ensure that it is correct, and ask that they pay it as soon as possible.
The check has already been mailed.
“I have already mailed you the check” - the oldest excuse in the book!
Ask your customer to confirm how he paid and the payment details, such as the credit card or check number, the date the payment was made and who processed the payment. If your customer hasn’t paid, they won’t be able to answer your questions.
The invoice is unclear.
Put the ball in your client’s court. First, have your client explain what he does not understand. Then, stay on the phone until you receive confirmation that the invoice is clear and will be paid.
Invoices are paid on a 30-day or 60-day basis.
The big company excuse. It is a business decision on your part as to whether you accept the large company’s stipulated terms or insist on yours being met.
If you wish to stick your ground, you are entitled to do so. But if you want to sell to big corporations, you may have to compromise your demands.
Your invoices will be paid on the next payment cycle.
Knowing your invoice will be paid on the next payment run is useless unless you know when that payment will be made. So when faced with this common excuse, ask when, how, and how much will be paid. You should follow up just before the payment date to ensure that your invoices have not fallen off the list.
The authorized person is not in the office.
Unavailable signatories are unlikely to mean anything other than an excuse. However, a way to bypass this excuse is to ask if another signatory is available. Otherwise, you will have to decide when the signatory will be available and get a firm promise on a payment date.
My customer has not yet paid me.
People sometimes feel that they are entitled to withhold payment until their customers make payment to them. So politely explain to your client that you do not have a ‘paid when paid’ contract and enforce your terms and conditions.
It was supposed to be paid by my roommate or spouse.
As before, explain that if an invoice is in your name, you’re expected to pay it.
I must pay my key supplier first.
An excuse such as this should never be accepted unless it was agreed upon at the time of contract signing. Therefore, insist on getting paid now because they try to delay it.
The goods/services have not been delivered.
Whatever you sell, you should obtain proof of delivery and acknowledgment of receipt from your customers. Otherwise, they might claim they never received anything from you.
In today’s digital age, proof of delivery and other kinds of documents can be stored in secure, electric archives. With email, documents can usually be retrieved instantly and sent to debtors quickly. Of course, the debtor should agree to pay you once they receive the pertinent documents.
The goods/services weren’t satisfactory.
Disputed invoices must be resolved swiftly. When there is a valid dispute about the services, goods or work you have done, try to resolve it swiftly so that you can get paid for your work.
You should detail the dispute in writing and get your client to agree to a course of remedy.
We have cash flow problems.
Cash flow problems arise, but you must not let the customer’s cash flow issue affect yours.
When your customer is truthful about experiencing a cash flow problem, your best option is to collect as much of the invoice payment as soon as possible. You might consider negotiating a repayment schedule with your customer and asking for a post-dated check.
The owner has died.
This is a very sensitive situation, but it doesn’t change the fact that you are still owed money. Although this can have an impact on when you get paid, it should not change the payment terms beyond a reasonable shift in payment date.
However, in most cases, the business carries on, and your invoice is still due. An LLC, PLC, LTD or LLP should continue while the surviving partners become accountable for the debts.
With sole proprietorships, there is often a good deal of paperwork to be completed before the release of any funds.
Our business has gone bankrupt.
Are they? First, verify if what they claim is true. We have found that many companies falsely claim bankruptcy to avoid paying. Even if your client has filed for bankruptcy, you should be aware of certain rights and remedies that might increase the chances of a meaningful recovery, even if the client filed for bankruptcy.
They’ve left the company.
Blaming a leaver is a classic tale that can leave you wondering who to turn to for help. However, it does not erase the debt.
Find out who’s in charge and if necessary, move up the management chain until someone takes over.
We are not liable.
Don’t get caught in complicated supply chains, where an order is placed by one company, but you are due payment by the final customer.
If you are engaging in a complex transaction, be sure to clearly identify the responsible party in your contract.
The debtor is never available.
Your debtor is never available - not so much an excuse as a delaying tactic.
Often, debtors will avoid you to avoid making payments. To overcome this, ask to speak to an alternative decision-maker. If possible, call at different times of the day, even before 9 am and after 5 pm. Ask for the cell phone numbers of the debtor or directors of the company, or escalate and complain to higher management.
Try calling them from a different line if they don’t answer your call. A debtor may see your number on their caller ID and not pick up. If gatekeepers are blocking you, try getting someone else to call and be non-specific about the reason for the call and see if it gets through.
I’m too busy.
There are also variations such as “I can’t get into the office this week” or “I’ve had a family emergency.” Ask probing questions about their workload, payment schedule and the timeframe for getting your money.
In today’s modern environment, online banking is available to all, and processing a payment is only a matter of seconds. So press your debtor for immediate payment! Alternatively, if that isn’t possible, suggest a payment date within the next day or two and re-chase if you don’t get paid on the agreed date.
I’m not going to pay! Make me.
The most nakedly blatant ‘excuse’ is the simple flat refusal to pay up.
Depending on the situation, you have the option of harassing the debtor (within legally permissible bounds), writing off the debt or passing it to a professional debt collector.
Conclusion
Companies are legally obligated to pay their debts when they become due. Late payments, however, are a common problem for all businesses.
Fortunately, you do not need to handle all these excuses yourself. You can hire a professional debt collection agency to deal with slow payers and their excuses.
How to get clients to pay overdue bills?
When To Hire A Debt Collection Agency
8 Questions to Ask Before You Hire a Debt Collection Agency
