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  • Writer's pictureFair Capital

How to Effectively Counter Excuses from Non-Paying Customers

Updated: Aug 25, 2023

Turning Excuses into Payments: Proven Tactics for Dealing with Non-Paying Customers


How to Effectively Deal with Customers Who Refuse to Pay

The most common excuses clients give for not paying-and what to do about them.



"I haven't received your invoice"

Hearing "I haven't received your invoice" can be a common excuse. The question is, how do you respond?


Identify your client's true intentions first. Ask your client directly "Is this the only reason for not paying? Then keep silent…. and wait for your client to respond.

If you sent the invoice via email, it's likely they received it, though it may be in their spam folder. You can ask them to search their inbox using the email address and date you sent the invoice.


If they comply, they're likely being honest. However, if they start making excuses like "I don't have time now" or "I'm not near a computer," they might be avoiding payment. In such cases, consider involving a collection agency.


Pro Tip: While on the phone with your client, make use of the opportunity to resend the invoice, ideally with an online payment link and an email tracking feature. Be sure to express the importance of their payment to your business. For instance, you could say, "This payment is very important to us, so I'm resending you the invoice right now. This way, I can confirm that you've received it and the payment is successfully processed."



“I already mailed you the check”

- The oldest excuse in the book! Ask your customer to confirm the payment details, such as the check number and the date the payment was made. If your customer falters, you know he's most likely lying.


Pro Tip: Once your customer says the payment has been mailed, don't expect them to retract after confronting them. Instead, provide them a way out by saying, "Okay, I'll make a note that we should expect your payment within the next 7 days. We will hold off from escalating the matter until the provided deadline." By doing so, you enable and encourage your customer to promptly send out a check.



"My customer has not yet paid me"

People sometimes feel they have the right not to pay their vendors until they receive payment from their customers. So, politely explain to your client that you do not have a ‘paid when paid’ contract and payment must be made regardless of any third-party arrangements.



"It was supposed to be paid by my roommate or spouse"

In response to this common excuse, clarify that the responsibility for payment lies with the individual whose name appears on the contract.


You might say something like, "I understand that you may have internal arrangements, but the invoice is issued in your name, making you responsible for its payment. The agreements you have with your roommate, spouse, or any other third party are separate from our business transaction." Never let such excuses deter your pursuit of payment.



"I must pay my key supplier first"

In response to this, emphasize the importance of your payment. You might say, "I understand you may have other obligations, but our agreement stipulates timely payment for services rendered. Just as you value your relationships with your key suppliers, we value our clients who respect our payment terms. If you have other vendors to pay, that's a separate concern and should not affect our agreed-upon terms."


Always insist on immediate payment unless a different arrangement has been mutually agreed upon.



“I'm not satisfied" or "I'm unhappy"

Consider this - you dine at a restaurant and leave without paying because you didn't enjoy the meal. Essentially, that's what your client is doing by refusing to pay due to dissatisfaction! While it's not justified for clients to refuse payment solely based on their subjective feelings about the service, it's vital to take any legitimate complaints about your goods or services seriously. If a defect or significant issue exists, your client might be justified in asking for a reduction in the charge, but not in refusing to pay entirely.


Having a clear understanding of what was promised in the terms of your written or oral agreement is crucial. In most instances, a minor breach of contract on your part doesn't warrant your customer refusing to pay, especially if the majority of the work was completed satisfactorily.


For more insights, you might want to look into Material vs. Immaterial Breach of Contract.




"The invoice is unclear"

Engage your client directly. Start by asking them to specify what exactly they find unclear about the invoice. Then, remain on the line until you receive confirmation that they understand the invoice and are committed to making the payment.


Keep in mind, this could just be a stalling tactic. If you suspect this might be the case, insist that your client details precisely what they find confusing. This not only holds your client accountable but also helps ensure that any legitimate confusion is clarified promptly.


Pro Tip: Instead of just resending the invoice, create a personalized video message explaining the invoice details and its importance. Attach the video link along with the invoice for a more engaging and impactful reminder.



“I’m not paying because It's an old invoice”

To break the ice, you might respond with, “Indeed, time does fly, but unfortunately, debts don't follow suit!” Then proceed to clarify that their failure to pay for a year or two doesn't make the debt vanish. Age doesn't negate the responsibility to settle an account. The obligation to pay remains until the debt is fully resolved.

Check out more on your State's statute of limitation

Find out more about the statute of limitations in your state.



"Invoices are paid on a 30-day or 60-day basis"

This is a typical response from larger corporations. While it's your right to stick to your payment terms, if you're looking to do business with these big entities, you might have to accommodate their payment cycle.


However, should you decide to enter such arrangements, it's vital that you adhere to their invoicing guidelines, such as providing a completed W-9 form. Doing so helps streamline the process and ensures your account gets processed in a timely manner.



"The authorized person is not in the office"

Sometimes, this is just a delay tactic. If you hear this, ask straightforwardly when the authorized person will return and when you can expect your invoice to be paid.


In most professional settings, if the authorized person isn't currently available, they should be able to provide an estimated return date. If they can't offer you a specific timeline, consider this a potential red flag.



"The contract was signed by someone without authorization"

Debtors may use the lack of authority argument when refusing to pay, but this does not release them from their duty to pay. Apparent authority is when a third party believes that an agent has the authority to act for another person or company when that authority has not actually been granted. Even if the employee does not have the authority to enter into contracts, the company will still be legally bound by the signed agreement.


To handle this, you must understand the legal concept of apparent authority and determine the real cause of the dispute. Seek professional help if necessary.



"The goods/services have not been delivered"

In any business, it's crucial to secure proof of delivery and receipt acknowledgment from your customers, no matter what you're selling. This prevents your clients from claiming they never received anything. In the digital age we live in, these kinds of proofs and other important documents can be securely stored in electronic archives. This allows for instant retrieval and swift delivery to clients when needed. Naturally, once the relevant documents are in their hands, your clients should agree to proceed with the payment.



"We have cash flow problems"

Cash flow problems can happen, but it's vital that your customer's cash flow issues don't impact your own. If a customer is honest about their financial struggles, your top priority should be to collect as much of the outstanding payment as soon as possible.


One potential approach is to negotiate a repayment plan with your customer, possibly even asking for a post-dated check. Establishing a realistic repayment schedule in collaboration with your customer might make them more likely to adhere to their payment obligations.


You could also suggest that they commit to payment upon receipt of their tax return, if applicable. This strategy not only provides a definite timeframe for payment, but could also motivate your customer to fulfill their commitment.


In a similar vein, if your client is expecting a tax return, consider negotiating a payment plan that takes this into account. For instance, you might agree to an initial partial payment, with the remaining balance to be settled once the tax return is received. However, remember there's no certainty that the client will get a tax return or that it will be sufficient to cover the remaining balance. Therefore, this shouldn't be the only resolution to a cash flow problem.



"The owner has died"

This is indeed a sensitive situation, yet it doesn't alter the fact that payment is still due to you. While the timing of your payment might be affected, it shouldn't significantly shift the payment terms beyond a reasonable delay.


Generally, the business will continue operations and your invoice remains due. For business structures like an LLC, PLC, LTD, or LLP, the responsibility for debts usually transfers to the surviving partners.


In the case of sole proprietorships, there might be considerable paperwork and legal procedures to complete before any funds are released. Despite the circumstances, it's essential to handle this situation with empathy and patience, understanding that it's a challenging time for all parties involved.



"Our business has gone bankrupt"

When faced with this claim, it's important to first verify if it is indeed true. Unfortunately, some companies may falsely assert bankruptcy as a means to evade payment. Even if your client has legitimately filed for bankruptcy, it's crucial to be aware of your rights and available remedies that could enhance the possibility of a meaningful recovery, despite their bankruptcy filing.


By understanding the applicable laws and regulations surrounding bankruptcy, you can explore potential options for recovering the amount owed to you. It may involve engaging with the bankruptcy court, seeking guidance from legal professionals, or exploring alternative avenues for debt recovery. While the situation can be challenging, it's essential to be proactive and informed to protect your interests during the bankruptcy process.



"They’ve left the company"

Blaming a former employee's departure can be a common story, but it doesn't absolve the company of its debt. It's important to identify who is currently in charge and responsible for settling outstanding payments. If necessary, escalate the matter up the management chain until someone assumes responsibility and takes action to address the situation.


Remember, the departure of an individual does not invalidate the financial obligations of the company.



"The debtor is never available"

When faced with a debtor who consistently avoids contact, it's important to recognize this as a delaying tactic rather than a genuine excuse. Debtors often dodge communication to evade making payments. However, there are strategies you can employ to overcome this challenge.


First, request to speak with an alternative decision-maker within the organization. This could be another contact who can address the outstanding payment issue. Additionally, try calling at different times of the day, including early mornings or after regular business hours, as availability might vary.


If necessary, ask for the cell phone numbers of the debtor or directors of the company to establish direct communication channels. If your attempts to reach them directly still prove unsuccessful, consider escalating the matter and expressing your concerns to higher management.


To increase the chances of getting through, try calling from a different phone number if the debtor consistently ignores your calls. Sometimes, debtors recognize your number on their caller ID and deliberately avoid answering. If gatekeepers are hindering your progress, consider having someone else make the call without specifying the exact reason, as it may improve the chances of reaching the debtor.


Remember, persistence and exploring different approaches can be key when dealing with unresponsive debtors.


Pro Tip: Consider utilizing alternative communication channels such as social media platforms or messaging apps. Reach out to the debtor through a direct message or personalized video, increasing the chances of getting their attention and engagement.



"I’m too busy"

When faced with the excuse of being too busy, it's important to probe further to gain clarity on the situation. Variations like "I can't get into the office this week" or "I've had a family emergency" may also arise. Ask specific questions about their current workload, payment schedule, and the timeframe for settling the outstanding amount.


In today's digital era, online banking is accessible to everyone, making payment processing quick and efficient. Therefore, firmly request immediate payment from your debtor. If immediate payment is not feasible, suggest a specific payment date within the next day or two, and emphasize the importance of honoring the agreement. Be prepared to follow up if the payment is not received on the agreed-upon date.


Remember, while understanding their situation is important, it's crucial to assert the urgency and necessity of payment to avoid further delays.



"I’m not going to pay! Make me"

When faced with an outright refusal to pay, it is an unambiguous challenge. While responding to this situation, consider the following options based on the specific circumstances:

  1. Harassment within legal boundaries: While it is essential to assert your rights, it's important to adhere to legal and ethical practices. Engage in firm but professional communication to emphasize the debt owed and the consequences of non-payment. Document all interactions for future reference.

  2. Write off the debt: Depending on the amount owed and the cost of pursuing legal action or debt collection, you may decide to write off the debt as a loss. Evaluate the financial implications and consider this option if it is in the best interest of your business.

  3. Engage a professional debt collector: If the debt is significant and the debtor is uncooperative, you may choose to involve a professional debt collection agency. These agencies have expertise in pursuing unpaid debts and can take appropriate legal actions to recover the funds on your behalf.



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.






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Disclaimer: Any and all information is not intended to be, nor is it, legal advice. Please consult your attorney for information concerning allowable rates of interest.

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