10 Common Customer Excuses for Paying Late and How to Overcome Them

Close-up Of A Person's Hand Opening The Envelope With Final Notice Invoice In It

How to Keep Your Cool and Keep Your Customers

Late paying customers are a constant problem for many businesses. When invoices are paid late it affects cash flow, and chasing the slow payers can waste a lot of time. It can also be frustrating to hear the same delaying tactics used again and again. Sometimes the excuses for late payment may be genuine. Often though, explanations for late payments are nothing more than a reason to keep your cash in your customers’ bank accounts for longer. Still, you can’t get too heavy-handed with your collections too soon. If you come down too hard on late payers prematurely, you could lose valuable business. Here are the top ten most common late payment excuses and tips on dealing with them.

1. The Check is In the Mail

There has been a steady increase in the number of companies paying their bills electronically. Even so, a considerable percentage of business to business (B2B) invoices are still settled by paper check. That leaves the door wide open for the oldest excuse in the book; the check is in the mail. The best way to deal with this excuse is to take down all the details of the payment. Ask when the check was sent, how much the check was for, and the check number. If the check does not arrive within a reasonable time, chase the customer for payment once more. If the same excuse is used again, you might want to consider offering the customer alternative electronic payment methods for future invoices.

2. We Didn’t Receive Your Invoice

Another favorite excuse to get a few extra days of free credit is the old “We don’t appear to have received that invoice” ploy. The best way to counter this is to immediately send a copy invoice via email while the customer is still on the phone. If the customer is too busy to wait for the copy invoice, add a read receipt confirmation to the email. Then, make a follow-up call later to confirm that the copy invoice has been received and request a date for payment.

3. We Pay All Our Invoices on 60-Day Terms

Some larger companies try to pay on their terms instead of yours. If that is the case, it is a commercial decision on your part as to whether you accept the big company’s enforced terms or insist on yours being met. If you want to stand your ground, you are entitled to do so. However, your payment terms must be clearly stated at the time of purchase and on the sales invoice. Generally, though, it is best to insist that all your customers pay per your payment terms unless expressly agreed otherwise.

4. You Are on the Next Payment Run

Knowing that your invoice will be paid on the next payment run is no use unless you know when that payment will be made. If you are given this common excuse for late payment, ask when payment will be made, how it will be made, and how much will be paid. Lists of accounts payables due for payment have a nasty habit of changing according to which suppliers make the most noise. So, it would be wise to make a follow-up call just before the promised payment date to ensure that your invoices haven’t fallen off the list.

5. The Invoice is Awaiting Approval

If the invoice has yet to be approved, you will need to find out the name of the person responsible for signing off the invoice. You can then contact that individual to ensure that there are no reasons why the invoice will not be paid. If you lack the seniority to contact the approver, escalate the matter to a more senior person within your company.

6. The Invoice is Disputed

If an invoice is in dispute, then the conflict needs to be resolved fast. The first thing to do in this situation is gathering as much information from your customer as possible. You need to know why the invoice is disputed and who in your company is dealing with the problem. It would also help to find out who within the debtor company is responsible for withholding payment. You will then need to take steps to resolve the dispute or escalate the problem to someone who can find a resolution.

7. We Have Cash Flow Problem

Cash flow problems happen, but your customer’s cash flow issue mustn’t become your own. When a customer is honest about experiencing a cash flow problem, your best option is to try to get as much of your invoice paid as soon as possible. You could consider agreeing on a repayment schedule with your customer, for example, or you could ask for a post-dated check. It would also be wise under these circumstances to limit your exposure to potential bad debt by placing a hold on the customer’s account.

8. We Require a Purchase Order Number

Some large companies do have strict purchasing processes that must be followed. It is, indeed, quite common for large organizations to insist that all supplier invoices are matched to a purchase invoice before payment. However, if a small business tries this excuse, it is probably only a delaying tactic. The only way around this would be to provide a PO number for the outstanding invoice and all future purchases. However, this point highlights the need to ensure that your invoices include all the necessary information to expedite payment.

9. The Authorized Signatory is Unavailable

An unavailable signatory is likely to be nothing but an excuse. If it were true, the whole business would be grinding to a halt because of one person’s absence. However, the only way to get around this common excuse is to ask if another signatory is available. Otherwise, you will have to settle for finding out when the signatory will be available and getting a firm promise on a payment date.

10. We are Changing Banks

A business may be in the process of changing its bank. However, it is doubtful that they are incapable of making any payments at all during this process. If the company is changing banks, ask if they could pay you by credit card. If credit card payment is not possible, this is another occasion when getting a firm commitment to a payment date will be your only option. However, remember to make a note of this excuse in the credit-control file. Businesses do not change their banks every month!

The Bottom Line

As unimaginative as some of these excuses may seem, they will always be a regular feature of making collection calls. How many times you accept these excuses before you stop doing business with a customer is your call. The crucial thing to do in the meantime is to document all the reasons for late payment and make follow-up calls to ensure that promises are kept. Should a customer continue to fob you off with excuses, though, you may have no alternative but to hire a collection agency to recover the debt for you.

About Universal Funding

Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.