In a climate where banks are reluctant to extend business overdrafts and companies facing pressure on cash flow, slow payers are getting increasingly creative when it comes to finding excuses for not paying invoices on time. In our experience, it's a nationwide problem and very common right here in Richmond upon Thames.
Fortunately Cashflow Protector can come to the rescue, offering a low-cost invoice chasing service that gets the money coming in and allows business owners to focus on more positive activities than chasing slow payers.
Here are 10 common excuses - and the way Cashflow Protector would handle them:
1) We're filing for bankruptcy. This is sometimes used as a delaying tactic. Ask for the liquidators name and check!
2) I was struck by lightning and now I'm unable to work. Insist on seeing a doctor's letter.
3) All invoices are put in a hat. If yours is chosen, you will get paid. If not, it will stay in the hat for another week. This is a case where only the threat of legal action will work.
4) The cheque is in the post. A classic! Ask for the date of posting (1st or 2nd class) and diarise to call back if it doesn't appear. Don't leave it.
5) We've moved premises and lost the cheque book. Ask for BACs payment instead, as banks will generally take about five days to print new cheques.
6) The cheque book has been destroyed by flooding. Commiserate with them, then request a BACs payment.
7) We can't pay, we're half way through an audit. Nonsense. The auditors only check the historical information and business has to continue.
8) You'll get paid as soon as our customers pay us. Explain that they ordered goods/service from you, not their client; refer to your Terms & Conditions.
9) The computer has a virus. Most reputable companies should have a disaster recovery plan and be able to issue manual payments.
10) We don't accept hand written invoices - they need to be computerised versions! A hand written invoice is valid.
These are all excuses and you need to deal with your debtors in a polite but robust way.
Here are five top tips to help you to get paid in a timely fashion:
1) Make sure your Terms and Conditions are up-to-date and that payment terms and any interest you can apply for late payment are included. If you update your terms, email them to all your clients letting them know that they have been updated and this latest version is the one you will be applying.
2) Find out who is responsible for issuing payment. This person is your point of contact for payment - not the customer who gives you the order. It is this person who you need to deal with directly.
3) If a promise of payment is made, diarise to call them the day after payment is due, if it doesn't arrive - and if it does, then thank them!
4) The softer you are and the more you let payment dates slide, the more your customers will assume you don't mind waiting and take advantage of your lenient credit terms.
5) Always be in control and avoid emotion creeping in. Stay calm and positive. You have every right to ask for payment on time. The only reason you are calling them is because they are late with payment.
If you need more help with chasing invoices, contact Cashflow Protector on 020 8614 1441 for information about their affordable outsourced invoice chasing service. Unlike factoring and invoice discounting, there's a flat fee structure regardless of the amount of the invoice.