Reasons for Late Payment

Reasons for late payment

The team at Direct Route has worked in debt collection for many, many years, which means when it comes to excuses and reasons for late payment, we’ve probably heard them all! 

Late payment and unpaid invoices are some of the most significant issues facing small businesses today.  It can be crippling.  Affecting cash flow, a business’s day-to-day operations, and even their ability to stay open! 

It’s estimated that over half of the invoices issued by SMEs are actually paid late. 

And it’s not just business operations this affects.  Late payments, and overdue invoices can cause a lot of stress, worry, and headaches to business owners. 

However, changes are afoot with the UK Government taking positive steps to ensure big businesses improve their payment practices and shorten the credit period. Still, like all things, this will take time. 

Consequences of late payment 

Businesses start to operate invoice to invoice, which is extremely unhealthy. 

Businesses are spending more time chasing invoices than spending time growing the business. 

Late payment is one of the leading causes of business failure. 

Late payment can severely damage a business’s credit score, making it extremely difficult to raise additional funds and boost financial standing. 

Productivity is limited if not dropped altogether as a result of late payment. 

As a professional debt collection agency, Direct Route wants to help you turn your credit control processes around.  Helping to collect on unpaid debts and stop some excuses linked to why invoices have not been paid. 

Our top excuses for late payment 

If you work in finance or within a credit control department, you will undoubtedly have heard many of the excuses listed below for why payment has not been made, and probably more that aren’t listed! 

“We can’t pay until we get paid ourselves” – in this situation, yes, they themselves are a victim of late payment; however, this is also not your problem, and you should refer your debtor to your payment terms and conditions which they agreed to at the start of the transaction. 

“The cheques in the post” – this is probably one of the oldest excuses around; however, if you don’t have the cheque, then you haven’t been paid.  Make sure to ask for evidence of postage, dates, was it sent second or first class post? Etc. 

“There’s no one in accounts today” – no problem, simply ask to speak to someone senior; quite often, the conversation can change when this happens. 

“What invoice?” – a very common delay tactic!  Make sure to confirm the address and all contact details and, if possible, resend the invoice via email asap, popping on delivery notifications and read receipts.  Include in your credit procedure telephone follow-up calls once invoices have been issued to ensure they have been received and send out monthly statements to prevent any lost invoice disputes. 

“We didn’t receive the goods/services” – very doubtful; however, make sure to check proof of delivery and all receipt acknowledgment and again follow this up with the appropriate personnel. 

“There’s a problem with the work” – if this is the first time this has been brought to your attention, then it is most likely a delay tactic; however, if there is a genuine claim, look to resolve this asap and reissue the invoice. 

“There’s a mistake on the invoice” – go through the invoice with the person, and change/amend all details as required, and then resend the invoice asap. 

“I can’t pay” – if your debtor has cash flow problems, depending on the circumstances and your relationship with the debtor, you could look at payment plans and possibly instalments. 

“There’s been a bereavement” – in these circumstances; we would advise each situation to be judged on its own merit, taking a sympathetic and polite approach. 

“We’re going into administration” – ask for proof!  If this is true, make sure to contact the administrators asap. 

“We’ve already paid” – again, this is very doubtful, but ask for details, times, dates, methods, etc., and most importantly, ask for proof. 

“We’re not going to pay” – well, this is just dumbfounding; however, it does happen.  In these situations, make sure to speak to a debt collection agency that offers commercial collection services.  A company that can work with you to recoup unpaid debts with interest and, in some circumstance’s compensation. 

Small business debt recovery 

We cannot underestimate the problems and issues caused due to late and non-payment. 

The good news is you don’t have to deal with the excuses for late payment alone. 

Outsourcing unpaid invoices to a business debt collection agency can help take the stress and strain away from you and your teams and allow the successful collection of monies owed. 

At Direct Route, we provide a range of commercial collection services to support small businesses remain operational. 

Let us help you today. 

Call 0330 229 1991