You will often read about the ‘late payment culture’ where many businesses only start to think about your invoice when it becomes due for payment. By definition, this culture means that your invoice is overdue, or late, before even being considered for payment.
Adopting a late payment culture demands its perpetrator be skilled in the art of deception: They must be ready with their excuses for non-payment and the more plausible the better.
We encounter late payment reasons every single day, so we have looked at the most common excuses, and how you might overcome them to get your invoice paid.
Invoice, what invoice?
Ridiculous as this may seem, it is a typical deflection for delaying payment; thankfully, it is easy to overcome.
You can ask for their email address, resend the unpaid invoice immediately, and confirm receipt: Reiterate your payment terms and late payment penalties that apply. Then re-commence negotiation.
You are on our next payment run/ we have already paid
For ‘next payment run’ feedback, you should note all the details like the date, amount, and payment method, also confirming your intent to call back if payment does not follow, as promised. Politely reiterate your payment terms and request that in future your invoices need moving to an earlier payment run, or you will be obliged to charge late payment penalties.
For ‘we have already paid’ comments, seek proof, any accounting system worth its salt will track and record payment, remittance advice being one example. If they have paid, they have the incentive to prove it. If they have not already paid, your questioning will quickly reveal this truth.
We have a problem with your goods/ services/ invoice
Here, it is vital to record their feedback, starting with details of their concern. If you can give immediate feedback, do so. If you need to investigate their concerns, commit to getting back to them at a given date or time. Gain their commitment to making payment once you have addressed their concerns.
Should the invoice be troubling them, you need to understand why. If they are disputing the invoice, ask for specific reasons, and always ask for immediate payment of the undisputed amounts while you investigate their dispute.
If you provide a service, you may hear excuses like ‘we have yet to introduce your recommendations.’ Here you must rely on your terms and conditions to push back their misunderstanding, asserting that delivery means you have completed your contractual obligation, and they must pay your invoice.
We have cash flow problems
Surprisingly, this is positive feedback. They are not disputing your invoice, they have a shortage of funds right now, and this leaves immediate scope for negotiation. First, ask when they can pay in full; you may find they can pay sooner than you thought. If things look like taking longer than expected, and you feel they cannot pay in full, seek a shortfall payment right now to prove goodwill and push for the balance on a short-term instalment plan.
The classic reason given for reduced cash flow is non-payment by one of the key customers in their supply chain, so they adopt the ‘pay when paid’ stance, and this again validates using your terms and conditions of trade to expedite payment to you. If they are paying some suppliers and not others, you need to improve your odds, with instalments again providing some rather than none, of what you are due. Confirm that you will add late payment charges.
I cannot get the invoice authorised for payment
Do not presume you understand what this means, or guess it means a director is unavailable to approve your invoice. Instead, ask why, and let them take the strain. If the absence of a director is their response, ask where the director is, and why they cannot authorise by telephone, or electronically.
If your questioning leads nowhere, ask to speak to their most senior officer present, preferably the company secretary who has executive responsibilities. Either this persistence will lead your contact to yield, or you have escalated the problem and increased the chances of payment.