How to overcome the 25 most common excuses for non-payment
Updated 5th November 2019.
James Salmon, Operations Director.
Do you have to deal with nuisance excuses for non-payment?
Running your own business can be tough!
Not only do you have to make sure the actual work that brings customers in through the door is done, you also have to take care of all the back office stuff that keeps the business running such as making sure your staff are paid properly, that your suppliers are happy, that your accounts are in order, updating social media and your website and making sure you are paid on time by your customers.
When your customers delay payment, and throw excuses at you, it can be difficult to know how to respond. Even a seasoned credit controller who might face excuses everyday can sometimes be caught out by a clever ruse.
This CPA guide deals with some of the most common delaying tactics and excuses for non-payment and describes how to deal with them.
1) “I have not been paid by my customer yet”.
Debtors sometimes feel that they are entitled to withhold payment until their customers make payment to them.
Unless you agreed this kind of credit arrangement from the start then this is clearly not the case and a strong line needs to be taken.
Ask the name and address of their debtor and the expected date of payment. Be sure to attempt to obtain all details of the debtor’s non-paying customer including telephone numbers and contact names. Having to provide these details is not something that the debtor will be keen to provide and it may be this is sufficient to tilt the balance in your favour.
Debtors often have procedures in place to “pay when paid” as this simplifies their checks and balances procedures. A determined and insistent collector should be able to overcome this.
If the person you normally speak to with regards payment of accounts doesn’t seem bothered ask to speak to the manager or the director of the company to highlight the issues you have discussed.
If however you are feeling extremely generous, you could offer flexible terms such as part-payment now with the balance on payment by his debtor or you could accept post-dated cheques to guarantee payment by a certain date.
2) “But I posted the cheque last week”
The cheque is in the post – The oldest and worse excuse in the book!
If you haven’t received the cheque, your client hasn’t paid you. It is their responsibility to make sure the payment arrives.
The postal system does not lose nearly as many items of mail as debtors would have you believe. It is statistically unlikely it has been lost.
Ask for proof of postage, or full details of when the cheque was posted, and whether it was sent by first or second-class mail. You could even ask for the cheque number. The more details you ask, the harder it is to bluff.
If the debtor is telling the truth they will generally be willing to accept and answer your questions. If they are not, the excuse will probably not be used again because of the professionalism and through nature of your questioning.
Keep a record of the details and check them against the cheque when it does arrive. A variation of this ploy is for debtors to purposely post cheques either unsigned or with either an incomplete or incorrect address to purposely delay its arrival.
Feel free to ask them to cancel the cheque and arrange payment by some other more reliable means such as bank transfer.
3) “Our director is not here to sign the cheque today”.
This excuse is often used during the summer months and over the Christmas and holiday periods.
As in judo, such excuses given by debtors can be turned against them and used to your advantage.
Ask them what arrangements have been made for paying salaries and other essential items (such as your invoices).
There are often a number of “pre signed” cheques which have been left for emergencies. Then, convincing your debtor that your account is essential and can be regarded as an emergency should be a simple matter for any reasonably skilled collector.
A variation of this can be when they need two signatories and say “The cheque is ready but waiting for a second cheque signatory”.
In that case push the debtor hard to forward the cheque with the single signature to you.
Ask them to follow this up with a request to their bank to clear the cheque upon presentation to the bank. Always ask for copies of both the posted cheque and the request to the bank for clearance.
4) “I have not received copy invoices/statement of account”
“We have not received your invoice or statement.” This is a very common delaying tactic.
Firstly, have the debtor confirm the address that you have to send invoices to for that client to check it is correct.
You shouldn’t pay the price for clients losing your invoice or simply failing to pay it – but unless you check that it has been received ahead of time, it’s often impossible to prove that your invoice ever arrived.
Have a policy of contacting the debtor to confirm receipt or asking them to acknowledge it . Send invoices by email so delivery can be documented and confirmed. If they do claim the invoice has not been received then have the debtor confirm to your that this is the only reason for withholding payment then, use a “closed” question, have them confirm that receipt of the copy invoice / statement will result in payment today.
A copy of the invoice is easily forwarded to a debtor company and images can be scanned and stored for electronic transfer via email. If the debtor is not prepared to make any agreement once invoices are received then this is often a sign that the excuse is a simple delaying tactic and a firmer hand needs to be taken.
5) “We didn’t receive the goods / services”
Whatever your product or service might be, make sure that you get proof of delivery and the customer’s acknowledgment of receipt. Otherwise they might simply claim they never received anything from you at all.
Today’s technology makes it possible to store invoices, proofs of delivery and other types of documents in secure electric archiving environments.
Documents are often capable of being retrieved at a moment’s notice and can be forwarded easily to debtors using email.
Ensure that the debtor provides you with a commitment to make payment immediately upon receiving the relevant documents (often the debtor company thinks the request for copies will buy them a week or two in further non-payment time).
Ensure the documents are provided quickly and further follow up calls are made quickly to ensure that the debtor company is keeping to their part of the bargain i.e. making payment.
6) “There is a problem with the work”
Often mentioning a dispute regarding the work will be left as long as possible to cause as much delay in resolution and therefore the need for payment.
It’s another classic.
If there is a genuine conflict over the work done, then of course resolve it as quickly as possible so that you can receive payment.
You should detail the conflict in writing, and get them to agree to a course of remedy.
A good way to prevent this is to contact the customer as soon as the invoice is issued to confirm it is OK rather than waiting till after 30, 45 or 60 days later so that any disputes can be resolved within the credit terms.
If they didn’t mention the problem immediately then it is probably just a delaying tactic. If there are many invoices overdue but only one invoice disputed, request that they immediately pay the invoices that are not disputed.
7) “There is a mistake on the invoice”
The devil is in the detail. Occasionally you will get details wrong on an invoice. If you have made an error then this can be flushed out by an early phone call and by making sure you promptly correct any error.
Get any details that need changed quickly and confirm this in writing.
It could also be that the customer changed some of the details between ordering and delivery. If you have a policy of getting any changes in writing then you will have documents to support the presumed discrepancy.
8) “I am waiting for my new cheque book to come through”
Any decent bank will be able to make payment via alternative methods. Push for a CHAPS or BACS payment. A transfer from one bank to another is often the quickest method of making payment and flushes out those deliberate non-paying debtors quickly. Be prepared to take action if the offer to make payment by alternative method other that cheque is refused.
9) “I am changing my bank account”
Switching accounts is a legitimate reason for very short-term disruption, but no business can survive for long without an active bank account.
Banks are committed to switching accounts as quickly as possible, and most businesses will have a contingency plan in the meantime; whether it’s a PayPal account, credit card or stockpile of cash.
Ask for proof of the situation and permission to speak to the bank concerned.
Point out to the debtor that their stance is unacceptable and that the costs of supporting the debtor’s non-payment (i.e. interest charges and late payment fees) could be passed onto them if full and immediate settlement is not made.
Again, push for payment either electronically or by way of a personal directors/shareholders cheque or use of the “emergency” payment method. If they refuse then you might just have flushed out a dodge rather than a legitimate excuse.
10) “I can’t pay the bill”
This is where good collectors earn their wages. If your debtor has a cash flow problem then that is their problem, not yours.
Be prepared to continue to press hard for full payment. If it becomes obvious that this is not working DO NOT switch immediately to installments.
Enquire first of all when the account may be able to be settled. The debtor often claims to be able to make full settlement within “a week or so”.
Now enquire “how much of the outstanding sum they are short of paying”. Ask for the difference in the sums to be paid immediately with the “shortfall” to be settled by the previously agreed “week or so” date.
Result…. payment in two sums as opposed to small instalments and settled over a relatively short time frame.
11) “The owner has died”
Variations can be the signatory or a director has deceased.
This is clearly a sensitive situation. There is not much that can be done immediately with this one.
However in most cases the business has to carry on and your invoice is still due.
Limited liability companies (PLC, LTD or LLP at the end of the business’s full name) should continue, while with partnerships, the surviving partners become accountable for the debts.
With sole traders there is often a good deal of paperwork to be completed prior to the release of any funds.
Verification of the debtors position is however essential and there may be attempts to delay payment by saying the deceased was the only one who could verify the order.
Therefore get all your paperwork lined up in support of your claim. A sympathetic, polite and yet firm approach is required.
Who, what, when and where is the order of the day.
Who is dealing with affairs? What are their contact details? When is it likely a payment will be made? Always ask for details and follow up thoroughly with appointed parties. You will want to be sympathetic and you may allow extra time but do not let it run on indefinitely.
12) “We are in receivership / liquidation / administration”
Have they really?
Or are they merely using it as an excuse or a scam.
Always ask for the name of the insolvency practitioner and make it clear you will be lodging a claim even if they try to put you off by saying there will be no pay-out.
Ask them when they ceased trading, asking for dates. Ask for details of the creditors meeting.
The more details you ask for, the more likely you will flush out a lie.
Whatever they say you will have to independently verify.
If it transpires that they have actually gone insolvent, be sure to lodge your claim. They rely on people not being bothered to minimise the fallout.
Contact any insolvency practitioners or administrators, particularly if you have a legitimate claim to intellectual property or any other form of security, and make sure you can prove if the company signed your own terms of business, which may help you to retrieve any goods supplied to them.
13) “I have to pay my key supplier first”
Ermmm what!
Why should you be treated as second class?
Every supplier should be a priority, so don’t accept this excuse.
You are not their bank and you should keep after them until they pay. As the saying goes ‘The squeaky wheel gets the oil’ so keep after them until they relent and pay.
14) “I Thought We Had 60 Days Not 30!”
You may have heard this excuse before.
If your Terms and conditions don’t clearly state a payment period, you could be at the receiving end of this excuse.
It is hugely important that all businesses, particularly small firms, establish clear payment terms to ensure they get paid on time and successfully manage their cashflow.
However under legislation, did you know that if no payment terms were explicitly agreed then the default is 30 days from receipt of the invoice.
When you speak to your customers, remind them of your payment terms and the possibility of being charged interest under the government’s Late Payment of Commercial Debts (Interest) Act 1998. For invoices that are not paid on time, the act enables you to claim interest, compensation and (for orders placed after 16 March 2013) your reasonable costs of collecting the debt where these exceed the compensation. Interest can be claimed at 8% over base together with debt recovery compensation at the rate of £40 – £100 per invoice.
15) “My accountant only comes in once a week, on a Thursday, from 6am to 9am”
If it sounds implausible then it often is. Be prepared to challenge the situation and the relevance or importance of this person in the payment process.
Look at the size of the business and judge whether the excuse stacks up.
A company owner or partner should be perfectly able to forward payment and tie up the loose ends when the accountant finally makes appearance in the office.
No business can really survive without the ability to make urgent payments. Ask whether anyone else there can authorise a bank transfer, whether the person left pre-signed cheques for such instances, or at the very least, confirm when they will return to work and make a diary note to chase for payment on that day.
16) “My accountant is off sick”
Variations of the “Absent Accountant” include “My accountant is off sick” or “Our bookkeeper is on holiday.” As above find out about their emergency arrangements and then convince them you are an “emergency”.
17) “They’ve left the company”
Blaming a leaver is a classic move, and can leave you wondering who to contact for help, but it doesn’t invalidate the debt. Get your paperwork in order and find out who has taken over and if necessary just move up the management chain until someone takes responsibility.
18) “We’ve already paid”
Another incredibly lazy excuse, and unless you’ve received the money into your account, it’s not really your problem if the debtor has sent payment to the wrong place.
Ask for proof of payment and ask for details. You should be able to quickly find a hole in their excuse.
Of course sometimes you find you were paid but it’s been incorrectly allocated. But still, that is a resolution.
19) “We pay after 90 days”
This is a big company excuse. They have payment policies and the jobsworth will repeat them like a mantra. You need to insist on the contractual terms you agreed and threaten to take it to their manager if they don’t listen.
20) “We pay everything at the end of the month”
This is the small business equivalent. They claim to only do their purchase ledger payments once a month. However if pressed they will admit that they do make some emergency payments. Now you have to make yourself the emergency by being relentless. Also if you are on 30 days then you will likely have passed one payment day already. You just have to get them to pay you early rather than late next time.
21) “We are not liable”
Avoid getting caught in complex supply chains, where one company places the order but you are due to be paid by the end customer. This can cause all sorts of headaches and risks of confusion over who actually owes you the money.
Keep any supplier arrangements you enter clear and simple. And if it is complex, make sure it is documented and agreed by all parties.
22) “The name is wrong”
Make sure you establish the name and identity of your customer upfront. Verify the address. You need the legal identity of the customer, not just a trading name. That will either be a company, in which case get the full company name and registration number; or it will be an individual, in which case get the full name and home address. This sort of issue needs to be sorted out when the order is placed and can be difficult to resolve who the debtor is when the invoice is already late.
23) The debtor is never available
The debtor is never available – not so much an excuse, but a delaying tactic nonetheless. Often debtors just avoid payment by avoiding you. As credit managers this is something we see regularly. It is uncommon for a customer never to be there, it’s often used as an excuse and delay tactic. To counter this, ask to speak to an alternative decision maker within the business. Ask for email addresses. Call at different times of the day, even before 9am and after 5pm, ask for mobile numbers for the debtor or directors of the company or escalate and complain to higher management.
Make sure you establish the name and identity of your customer upfront. Verify the address. You need the legal identity of the customer, not just a trading name. That will either be a company, in which case get the full company name and registration number; or it will be an individual, in which case get the full name and home address. This sort of issue needs to be sorted out when the order is placed and can be difficult to resolve who the debtor is when the invoice is already late.
If you are calling them and they never answer, try calling from a different line. They may be seeing your number on caller ID and not picking up. If gatekeepers are blocking you, then try getting someone else to call and be opaque about the reason for the call and see if that gets through. If this doesn’t work fax, email and post a “Letter Before Action”, to the Directors of the company giving them 7 days to pay, put a stop on the customer’s account if necessary until payment is received.
24) “I’m too busy”
Variations include “I can’t get into the office this week” or “I’ve had a family emergency”. – If your debtor claims to be to busy then they must be making lots of money and therefore must be able to pay your outstanding invoice. Use probing questions to ask how busy they are, when they are going to be paid and when you can expect your cash. Highlight to the debtor that in today’s modern environment everyone has access to online banking and it only takes a matter of seconds to process a payment to you. Press the debtor for immediate payment! If that cannot be accommodated arrange a payment date within the next day or so and chase again if you are not paid on the agreed date.
25) “We are not going to pay! Make us”
The most bare-faced ‘excuse’ of them all is the simple flat refusal to pay up. Good Luck!
You are left with either harassing the debtor (within the limits of the law, of course), writing off the debt, passing it to a professional debt collector or taking legal action in to recover what you are owed.
They clearly don’t have a conscience but if you make it clear you are not going to be put off and tell the debtor the extra steps you are going to take and tell them that they are going to be liable for the extra costs, the interest and the compensation then that might appeal to their wallet and prompt a reluctant payment.
Sometimes just saying “I don’t care about the cost, it is a matter of principle” can have an effect.
Conclusion
Companies have a legal obligation to meet their debts when they fall due. If they cannot they are technically trading whilst insolvent. However late payment is a common problem for all businesses.
You do not have to handle all these excuses yourself. You can instruct an established debt collection professional who will assist you with the hassle of slow payers and their excuses.
You might be hesitant about contacting a debt collection agency. What are they going to be like? Can they help your particular type of business? There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike. Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
Please call us on 0330 053 9263 to discuss your debt collection requirements in total confidence. Alternatively, either email us or use our contact form.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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