3 More Late Payment Excuses, and How to Deal With Them

A couple of years ago we wrote a post about the 5 common excuses for late payments, and how to deal with them. You can read it here. Well, since then some more excuses have kept cropping up, so we thought it was about time for an update. A lot has happened in the past few years, and while the excuses generally haven’t changed, there are a few that we’ve seen crop up over and over again. If you want to avoid your own cash flow issues, you need to know what they are, how to respond to them, and what to do to prevent them in the future.

We Don’t Have the Money

This is possibly the worst thing you can hear from a customer. The good news is that, while it may make your heart sink, there are some good options to move forward with.

Firstly, try to find out when the customer thinks they will be able to pay. Often, it’s merely a cash flow issue, and they’ll tell you the money will be there in a week or two. Next, try to find out how much they’re short by. You’re asking this to figure out if it’s possible for them to pay some of what they owe now, and the balance when the money does come through.

If they then come up with more excuses about why they can’t do this, then it might be time to involve a debt collection agency. This is exactly the type of situation they are trained to deal with, and their experience will help to verify whether the customer is being truthful. When they are, they’ll work with you and the customer to agree on a payment plan that suits everyone’s circumstances, and make sure it’s followed.

We’re Waiting for a Third Party to Pay Us

We understand. Cash flow issues plague almost every business nowadays, especially with the economy in the state it’s in. And sometimes you have to wait to be paid by a customer before you can pay your suppliers. But that doesn’t mean your customers should be causing you your own cash flow issues.

Here is where you need to be firm. Explain that you’re sorry for their situation, but you still expect to be paid on time, as per your terms and conditions. Explain what the process is if payment isn’t made on time, and any interest you may charge. If they’re still adamant they can’t pay the full amount when it’s due, you can take a similar approach as above. See if you can get an initial payment, and arrange for the rest to be sent once the third party has paid. Make sure you get the date the third party is expected to pay by, so that you can follow up on this when needed.

An Internal Issue is Stopping us From Paying

This is a difficult one, because it could refer to such a wide range of issues. Sickness, holiday, system failure, fire, insolvency or even a senior team member passing away. Some of these need to be handled more tactfully than others, the same basic process should be followed.

Reach out, and find out as many details as you can. If there’s an absence, try to find out who can authorise payment and when they will next be available. If there’s a system or technical problem, you can ask if there’s a way to work around the system to get the payment processed, and if not, when they expect the system to be running again.

In a more serious situation, first and foremost, be empathetic. But also try to find out whether your customer will be able to continue trading. It might be that recovering the full payment is impossible for now or completely. By gathering details and making sure the information you have is correct, you’ll be able to plan a course of action that works for everyone.

At Debtcol, we are here to help you understand why your clients aren’t paying, and change it. We have heard every excuse in the book, and know how to handle them professionally and effectively. If you would like some support in handling late payments, please just get in touch with us today to arrange your free consultation.