Late payment is an ongoing problem for any business, large or small. However, the smaller the enterprise, the less resources there are to go after those who don’t pay, and the bigger the impact can be on the business’ bottom line. Some of the excuses below may be very familiar to you but you don’t just have to listen and do nothing.
“I didn’t get the invoice”/ “The invoice is wrong”
Make sure you send copies of all your invoices via email and then there can be no claims of non-receipt. If there’s an issue with the invoice it doesn’t make it any less due. Ask the customer what the problem is, re-send an amended invoice via email and, in most cases, they will still need to make the payment as soon as possible. To prevent this kind of issue arising in the first place, take extra care when producing invoices – figures, company names and order numbers should be correct first time.
“The cheque is in the post”
There’s a very simple answer to this one – don’t take cheques. Cheque use in the UK has reduced by about one and a half billion over the past decade and the Association of Payments and Clearing Services has indicated that this will be phased out as a payment method so there is scope to start refusing to accept cheques. If you’re currently stuck with a non-paying cheque customer making the above excuse then find out when they posted the cheque, and by what method. Remember that the responsibility for the cheque is theirs, so if it gets lost in the mail they will have to work out another payment method.
“I’ll pay you when I get paid”
Ok, there are plenty of businesses that are operating at minimum cashflow levels right now but if you agree to make a payment, you should make it on time. Try to get in writing the date on which the other party is likely to be in funds. Ask for a post-dated cheque for that date or evidence of a bank transfer set up for the next day so you have some assurance that your payment is at least on their radar.
“I’m sorry but because of the dispute I’m not paying you.”
This is a difficult one. The first step is to establish whether there is any kind of dispute in progress – ask for the full details and what the dispute concerns. If there genuinely is a problem then take this as an opportunity to resolve it. Whatever happens, make sure that all your correspondence takes place in writing so that you have a record of exactly what was said.
“The person who can authorise the payment is sick/dead/on holiday.”
It’s highly unlikely that the entire company stops functioning if one person isn’t there so find out who their second in command is. If there’s no option but to wait for someone to return or be replaced then get a firm date for the payment, in writing.
“We are in liquidation/we have stopped trading.”
If the company really is in some type of formal insolvency (liquidation, receivership, bankruptcy, IVA) you’ll need to find out who the liquidators are and get in touch. They will need proof that your terms and conditions were signed by someone at the company in question, as well as information on whether you have any security, intellectual property or reserved title. If the company has simply ceased trading, you can pursue the debt through the courts if you believe it has the assets to pay.
For advice on recovering a commercial debt please call 01772 253841 or click here to contact us.
