Few things are as frustrating as customers that don’t pay their bills on time.
In a perfect world, payments would be automatically transmitted as soon as the product or service was delivered, and in some cases, you can set up systems that will do this for you.
Unfortunately, many of the businesses you may be dealing with will provide their B2B payments through good old-fashioned checks sent through the mail.
The good news is that there are certain things that you can do to protect yourself against late payments or communications problems.
However, if you find yourself dealing with a customer that’s made a habit out of late payments, here are some good tips for how to respond to their excuses.
“The Check is In the Mail”
The first response many will give when asked why the haven’t paid you yet is to tell you that they in fact already have.
This is a common excuse because it can buy them a few days. It’s impossible to prove that they haven’t put it in the mail yet, and it passes the responsibility of the missing payment on to the post office.
In many cases, they’ll panic and post the check immediately, so when you get it in two days they can say “See? We told you we sent it.”
If after a few days you still haven’t received the payment, you’ll have to take a firmer stance. Ask them to cancel the previous check (which they probably never sent) and re-send the payment via certified mail, and to provide you with the tracking number.
“We Haven’t Received a Bill”
This is a quick and easy way for a customer to put the onus back on you. The first thing you should do is make sure that you have the correct address of the person that you should be sending it to.
Once you’ve verified the information is correct, re-send the invoice via fax or even certified mail, requiring a signature upon delivery.
This way, you’ll have proof that not only did you send it, but that someone in the office received it.
If it’s a frequent problem, you can plan to require a signature on all bills going forward as well. Better yet, stick to electronic payment processing and request confirmation when it’s received, and you’ll have proof of delivery.
“We Haven’t Received the Product Yet”
This is another common tactic to put the responsibility back on you as the provider of the product or service.
This can be avoided by ensuring you are able to track shipment and delivery information and require a signature upon receipt.
If the product was a digital document or file, you should be able to reproduce it and send it out again immediately. If, however, it was physical items and you didn’t send it via a service that tracks, you may have to deal with the consequences of not paying for the extra insurance.
“Someone is Sick/Out of the Office”
Saying that the person who handles the invoicing is out sick or on vacation is a frequent way to delay making a payment.
You should ask for the name and contact information for that person and ask if there is a date that they are expected to return.
If it’s just a few days out, you can reasonably wait for them to return and contact them to take care of the payment.
If you’re told that it’s going to be 3 weeks, it’s perfectly acceptable to demand that other arrangements be made to take care of the payment.
Ask to speak to someone further up the operational chain and explain your expectations, and that they should have hired a temp to cover their responsibilities prior to an extended leave.
Explain that the payment is already past due and give them a clear deadline for the payment and let them figure out how to meet it.
“Our System is Down”
Blaming payment problems on technology is another way to try to delay payment or to try and excuse the fact that they haven’t paid yet.
We’ve all had struggles with technology and while they’re understandable, they’re also usually temporary.
Ask when they expect the problem to be resolved and how soon you can expect to receive the payment.
If they tell you that they aren’t sure or that they have no way of knowing, ask if arrangements can be made to send the payment via a check, rather than waiting on the computer.
If they’re being honest, they should have no problem doing it.
“We’re Waiting for a Payment Ourselves”
While this may legitimately be true, it’s not your problem.
A reputable business should have reserves or better cash management policies to prevent a situation like this from occurring. Your payment should not be dependent on their receipt of payment.
If it is, then your customer is not managing their business well, and this is likely to continue to be a problem.
Once again, give them a new deadline for the payment, and then advise that future orders will require payment ahead of time or at the very least a deposit before they are filed.
While you may be willing to forgive the occasional late payment from a valued customer, don’t tolerate it becoming a regular issue.
Review your own billing policies and contracts and see if there is anything you can do on your end do to prevent future delays and set up automatic and trackable shipping and billing procedures.
What are the top excuses for customers paying late?
- The check is in the mail
- We haven't received the bill
- We haven't received the product
- Someone is sick / out of office
- Our system is down
- We are waiting for payment ourselves
About the author: Alana Downer is an experienced financial advisor from Sydney. Interesting in unique and smart ways of creating and managing income, Alana is currently supporting an educational platform Learn to Trade, and might be found online, participating in financial discussions and sharing her tips with other experts. Privately, a huge fan of technology and literature.