As a business owner, you’ve probably heard all the excuses for non-payment. But do you know the best way to combat these excuses?
Potentially the most frustrating response, you are within your right to ask for proof if someone responds with this excuse. You can either ask for three months of bank statements and management accounts, and if they refuse, it’s likely this is not a genuine reason and you can continue with your collections process.
If they say that they have no money due to the COVID-19 pandemic, ask if they’ve applied for any COVID-19 loans from the government - one of the purposes of these loans is to enable businesses to continue paying their invoices.
The first thing to do here is send an email with the invoice as soon as possible, and ensure that you have the correct email address. Follow up with a phone call asking if they received the email.
Ideally you should have a process in place where you follow up your invoices with confirmation of receipt calls or emails, at least a week before the invoice is due. When you have this process in place, you can avoid these excuses.
If a customer states unhappiness with work for a reason not to pay, you need to ensure that you respond quickly and ask for details in writing. From there, you can resolve the issue. If their problem is only with part of the work, request that they pay for the work they are happy with immediately, as then you will only be waiting for part of the invoice.
A common excuse is blaming non-payment on supply chain problems. Ask when they expect to receive payment from their customer, and the details of their customer. If they continue to use this excuse, consider contacting their customer themselves. This cashflow problem is theirs to deal with, not yours, and therefore it should not impact your business.
Unfortunately, this is a lazy excuse and one that still crops up frequently. The company should still have a staff member who is authorised to pay in emergency situations like this, so ask who that member of staff is. If they don’t have anyone who can authorise the payment, ask when the relevant member of staff will return to work, and set yourself a reminder to call then.
Make sure to remedy the mistake immediately, and get it in writing. To avoid this mistake in the future, put a confirmation of receipt policy in place, as mentioned above. This way, if an invoice does contain a mistake, you’ll find out before the invoice is due and can correct it accordingly.
If a company states that they have gone into liquidation or administration, ask them for proof such as their proposed Insolvency practitioner or the Companies House files. If they won’t provide proof, you could always check with Companies House yourself, however you are still within your rights to continue with your collections process if they won’t provide you with any proof.
This could be a genuine reason - or it could not. Ask when they started the switch process, and don’t be afraid to ask more questions such as when they expect to have the process completed. It shouldn’t take more than a few days, so remember to call back after a couple of days to follow up and ask for payment.
Make sure to resolve the query as soon as possible, and ensure that you get the query and the proposed remedy in writing. As mentioned above, a good process will allow for queries. If you ensure that you send emails before the invoice is even due, the possibility for queries to be remedied before the due date increases, and decreases the chance of late payment.
Of course, it is possible you may have missed the invoice - be sure to check before chasing. However, this is a common excuse and delayment tactic, so if you haven’t received the money, be sure to ask for proof. The customer should be able to provide proof of payment - if not, they haven’t sent the money.
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