Late payment excuses and how to deal with them

Late payment excuses and how to deal with them

We live in a late payment culture, with ongoing reports showing that over three-quarters of businesses experience problems with overdue invoices.

How businesses manage this area of late payment and put in place effective credit control processes determines the effect of late payment and how you can successfully avoid these situations.

Collection invoice letters are often sent immediately after an invoice becomes overdue, and in most cases, this can be enough to motivate debtors to settle their outstanding bills.

However, we also know that excuses and reasons for late payment are in abundance, and after years of working in the sector, we’ve heard just about them all. In this post, we’ve pulled together some of the most common excuses and how you can manage them.

Common reasons for late payment and how to deal with them

What invoice?

This is the most commonly heard excuse we encounter. In this instance, the debtor will deny that they have received anything and ask you to send it again for their attention.

Check that the invoice was sent to the right person, check the spelling of names and addresses, etc., and then make sure you reissue the invoice as soon as possible via their preferred method of communication, ideally email. Follow this up by asking them to confirm receipt of the communication.

Reiterate your payment terms, deadlines, and any late payment charges/additional interest that may be charged as a result of the invoice unpaid.

Incorrect details

Sometimes mistakes do happen, and the information contained on the invoice may not be 100% accurate. This is where it’s vital that you build robust credit control procedures that include quality checks that allow you time to check that names, addresses, outstanding balances, etc, are all correct before sending.

We’ll pay you when our customer pays us

This is not a great situation, and responding to common late payment excuses like this can be challenging. However, be prepared. Find out as much information as possible. For example, when do they expect to be paid? Is this a reasonable timeframe? Could you negotiate a payment plan in the interim?

It’s also important to record these conversations and information on file for future reference and if the debt is taken to court.

We’ve already paid/payment is on the way

Ask them for proof. This is not a case of you calling them a liar but confirming receipt for you to follow up on your end. Ask for a receipt, date, time, how payment was made, etc., so you can follow up accordingly.

If payment is on the way, ask them how payment is being made and when so you can look out for it.

There’s a problem with the goods/services

If the customer has a problem with the goods or services you have provided, make sure to record all feedback relating to their concern and look to address this as soon as possible.

Sorting out any problems or issues as soon as possible helps you to get paid on time.

It may also be a good opportunity to refer back to your T&Cs where necessary.

We’re currently experiencing cash flow problems

This is a tricky one when it comes to how to deal with late payment excuses, especially if the client is a long-standing customer of yours. In these instances, look to see if it would be feasible to negotiate a payment plan. Is there an option for an immediate part payment?

Remember to confirm everything in writing.

Our systems are currently down

Overdue invoices are unacceptable, but we accept that sometimes the inevitable, such as system failure, does happen. In these situations, ask them how long they expect the downtime to be for and what their workaround/contingency is in the interim.

I can’t get the payment authorised

This may be because the person is out of the office, on holiday, off sick, etc. Make sure to have prepared a series of questions to understand the reasons why payment cannot be authorised and how you can escalate the matter.

What provision do they have in place to pay bills? Who else has authorisation over payments?

I thought we had 60 days to pay, not 30

This is one of the main reasons why including payment terms on your invoices is so important. It should clearly state when payment is due and the deadline. By law, payment is set at a maximum of 30 days. After this period, you are entitled to add late payment charges and additional interest.

Late Invoice Payment

Unfortunately, late and overdue invoices are common; however, how your credit control processes are set up can help ensure they don’t negatively affect your business.

Chasing late payments can be incredibly frustrating, especially when you need cash flow to keep your business running smoothly.

We can help.

We understand that recovering overdue invoices can be incredibly time-consuming and challenging, and we also know that often, the same businesses will continue to make the same excuses.

As a professional debt collection team, we help support your credit control processes by working to collect late payments on your behalf effectively and efficiently.

To find out more, contact us today at +44 7860 197 476 or email memberbenefits@directroute.co.uk for further information.