The Top Five Explanations for Late Payment in no Particular Order Are:
“We haven’t received your invoice”
Be pro-active, especially because most customers will wait until just before or after the due date to request a copy.
Email your invoices to the right person, this may or may not be the accounts department, sending it the wrong person will mean a delay in it getting to the right person. Attach a delivery receipt and keep it.
“Your cheque is in the post”
Yes, there are still some businesses that pay by cheque and you are obliged to accept all reasonable methods of payment.
By asking your customer for the cheque number and the remittance advice you can set a reasonable deadline for receipt and if it is not received by then ask for it to be cancelled and re issued, of perhaps offer to collect it.
“We haven’t been paid by our clients yet”
This is a very common as every business relies on being paid to pay its suppliers, late payment means raiding the cash funds set aside for VAT or worse still profit, once those start to diminish then they are literally robbing Peter to pay Paul until Peter wants all or a good part of his money back.
The paid when paid argument is now considered an unfair term and should not be incorporated into terms of business.
Remember that most businesses are not in touch with their accountants as often as you think, using packages such as Xero and QuickBooks or Sage and for that reason many don’t see the cash gap before it is on top of them.
Consider working with them, ask if they can propose a repayment plan over a reasonable time period, but be realistic.
“The person who authorises your payment is not in the office today”
Payment runs can be pre set as can standing orders, cheques pre signed etc. So, it really comes down to whether your payment is authorised for the payment run.
Payment runs are most often done mid-month and month end or sometimes both.
Ask them to advise when the relevant person will be back in the office, take their name and a direct email address, confirm that you their return and diarise the date to follow it up.
“There’s a problem with your work”
Most disputes that are genuine are notified way before the due date, when you consider that most businesses order goods or services because they have a need they are going to be quick to tell you if there is a problem.
So, to try and stop the “fictitious dispute” being used to stall for time, obtain a signed satisfaction note when your complete work if you have provided a service, tradesmen leave themselves open to this far too many times. Review your terms and conditions do you a disputes and remedies clause by stating how many days your customer must raise a dispute and how you will deal with it you can often prevent this situation arising.
The Persistent Late Payer or The We Pay to our terms.
It is entirely possible that you have not read a purchase order or your customers terms that may have been attached to an email. Tradesmen are bound by the client’s terms as soon as they walk on site, regardless of whether they have asked to see them or read the main contract which is often available on site.
Stating payment due in 7 days, or by return or 30 days on your invoice does not mean your terms apply.
You need to have terms and conditions in place before you supply goods or services, in the event of nonpayment these can help support any recovery action you may need to take.
