When you notice an unpaid invoice, the first step is to contact the customer to try and find out if they think they have already paid it, and if not, whether they intend to do so or not.
But this is where the excuses start coming in, and if you’re not prepared for them in advance, it’s easy to get caught off-guard with a reason for non-payment that really shouldn’t be acceptable.
Here are five of the top excuses given by non-paying customers, and the appropriate response to get around them.
1. ‘We didn’t get your invoice.’
The best way to combat this is proactively – when you send an invoice, ask for confirmation of receipt, ideally in writing.
If you invoice by email, consider requesting a ‘read receipt’ on the email, although this is not confirmation that the invoice has gone to the right place – the better option is a quick phone call where possible, just to make sure the details on the invoice are all correct and that it is being handled by the client.
For the situation where the deadline has already expired, there’s little you can do except to reissue the invoice and make clear that payment is required as soon as possible, and certainly within the standard agreed terms.
2. ‘The order was incomplete/incorrect.’
Let’s be clear on this one – if the customer accepts the order in the first instance, it’s not OK for them to raise some kind of dispute 30 or 60 days later when payment is due.
It’s sensible to have a mention in your terms and conditions of what constitutes ‘acceptance’ of the order – for example, with physical goods, you might state that inspection on delivery is required, with any problems flagged up immediately.
By defining when the order has been accepted, you help to make it harder for any perceived dispute to be used as an excuse for non-payment later.
3. ‘We’re waiting to get paid by…
It doesn’t matter if the client is waiting for their own customers to settle their debts, expecting an influx of investor funding, or hoping to win the lottery; you may provide them with a line of credit (or supply goods or services for payment later) but you are not responsible for their entire supply chain.
Again, Ts & Cs can protect you against this by setting out the penalty fees and statutory interest you will charge on overdue invoices.
But although you’re not obliged to, it can also be wise to send a reminder a few days before the invoice deadline, to make clear that you’re owed the money on time, no matter what might be happening with the debtor’s cash flow – and that if they fail to pay on time, penalties will be applied.
4. ‘It cost more than we expected.’
There’s really no good reason why this should be a valid excuse. It’s up to the client to make clear if they have an upper limit on their budget, or if they expect to pay a specific price for their order.
If you entered into an open-ended agreement allowing you to incur additional costs on their behalf, such as by putting in extra man-hours to get the work done, then they’re liable to pay you for the costs incurred.
While you’re under no obligation to offer any assistance to the debtor in paying you what they owe, you might want to consider accepting payment by instalments, or even (as a sign of extremely good faith) a discount, if you think it’s the only way to get back a good proportion of the full amount.
5. ‘Oh, he/she has left the company.’
This doesn’t matter. When you do some work for an organisation, the organisation owes you for the work done; if your individual point of contact leaves before the invoice is paid, it doesn’t simply cancel the debt.
Make this abundantly clear to the company – and ideally, the original invoice will have been sent to their accounts department, and not just to the individual who you dealt with directly.
Either way, if the individual was authorised to place the order, and especially if you can show that the goods or services have been used by the company since delivery, there should be no way to claim that they don’t owe you the money – just be ready for the spin-off excuse of ‘we already paid this’ with bank statements that show the money was never received.
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