It is well known that SMEs across the UK are chasing more than £50bn in late payments. Reaching the payment due date and not seeing the money in your bank is very frustrating.
To help, we’ve put together some of the most common excuses for not paying invoices on time, along with some tips on how you can deal with them.
“We haven’t received your invoice”
There’s nothing worse than calling your client and hearing the words “Invoice, what invoice?” Unfortunately, it is a well-known tactic for clients who want to try and delay payment.
To avoid this happening in the future, as soon as you send your invoice, follow up with your client to confirm it has been received. Ideally, this would be via email so you have a recorded response.
Another tip is to make sure you send your invoices with read receipts so you have a record of when it was opened.
“Payment is on its way”
We’ve all heard it “Your cheque is in the post”, although now with some modern variations. It could be genuine or it could be yet another excuse to delay payment. You can usually establish which one it falls under by following the advice below.
Ask your client for proof of payment, this would be in the form of a ‘remittance advice’. This is a letter from their finance department proving that payment has been made. If they can’t provide you with this, it is a tell-tale sign that payment hasn’t been made and they are trying to delay.
If you have a client who is a persistent late payer, it may be worth suggesting that they set up a direct debit. This means you’ll know exactly when payment is being made each month and your team don’t have to waste time every month chasing this particular client.
“We can’t pay you until we get paid”
Your client could claim that they cannot pay your invoice until they have received payment from their client. It’s a difficult one to establish whether your client is having genuine cash flow issues or if, like the above, it is just another excuse to delay payment.
It is important to convey that you still expect to be paid as per your terms and conditions. However, if the excuse is genuine, you could suggest staged payments. Work out how much they can pay now with the remainder to be paid a week later or once their client has made payment.
Depending on the nature of your business, it may be worth changing your payment terms for certain projects or services. For example, if the work requires a huge amount of work to be done upfront before the project is completed, you could ask for 50% upfront with the remaining 50% to be made on completion of the project.
“There’s a problem with the work, product or invoice”
Another common excuse for late payment is a dispute with the work, product or invoice. If your client has highlighted an issue with any of the above well before the payment date, then it is highly likely that this is genuine. However, if they wait until payment is late to raise concerns, it could be another tactic to delay payment.
For clients with a genuine complaint (raised well in advance of payment), be sure to detail their dispute and agree a resolution. This will ensure that payment is still made within the agreed terms.
If the dispute is raised after the payment date, again, detail their issues and agree a resolution. You should then try to get confirmation that once the resolution is carried out, payment will be made.
“The person who processes payment is on holiday/off sick/not in the office today”
Probably one of the most common and frustrating excuses is being told that the person who deals with invoices and payments isn’t in the office!
Firstly, confirm when this person is due back in the office and then continue chasing them on this date. If they are on holiday for the next two weeks or on sick leave and unsure on when they will return, find out who is authorised to process the payment on their behalf.
If you are spending more time dealing with late payments than working on your own business, contact our team to see how we can help you get your time back. We work on a no collection no fee basis so what have you got to lose?