You’ve worked hard to make that sale. You’ve delivered the goods. Congratulations. It took effort to nurture that relationship. Now you need to get paid as otherwise you’ll be in trouble. You have bills to pay, and people rely on you.
How do you get paid on time?
The most important way is to maintain contact with your customer. Know who to speak to and don’t be afraid to ask questions. The obvious warning sign is taking longer to pay your invoices. Avoiding your calls and coming up with new excuses is a huge red flag. If this starts to happen, make sure you don’t supply any more product until the account is brought up to date, and then consider either a smaller credit line or even withdraw terms altogether and ask for payment up front. Do not ignore this, if they aren’t paying you, chances are they are also delaying payment with their other customers and with a limited amount of available cash it will be the person that is asking for their money that will get paid.
Red Flags of a Failing Business
Be aware of staff turnover. Are your contacts constantly leaving, particularly the good ones or management? Does everyone seem stressed out or never there? Poor morale and ever-changing employees are a sure sign something not so great is going on within the business. Another, subtler sign, is a delaying delivery of orders or projects. Maybe this is because they have lost customers or know they can’t pay for them.
What to do when your customer cannot pay:
We have heard so many excuses for non-payment we could write a book. Just to summarize a few of the most common, we have made a list. How many of these have you heard?
Top 15 excuses for non-payment:
1. “We’re waiting to get paid.” or “We can’t pay you until we’ve been paid ourselves.”
2. “We didn’t get the goods. Can you send a proof of delivery?”
3. “I’m not paying as there is a dispute.”
4. “I’ve never received a copy of the invoice. Can you send me a copy?”
5. “The invoice was wrong, and I need a new one.” Did it really take 90 days to come up with this excuse?
To help prevent numbers 2-5, have a process in place to make a quick call soon after delivery to confirm they got what they ordered and are happy with everything.
6. “I meant to pay last week. Sorry, I forgot/was too busy.”
7. “I sent the check. Did it not arrive?” How many times have you heard the check is in the mail?
8. “Management is not around to sign the check/authorize payment.”
9. The check signatory is dead, in the hospital, ill, or has a broken arm and can’t sign a check.
10. “We ran out of checks.”
11. “We are in the process of changing banks” or “We can’t access the money right now”
12. “Our bookkeeper is only here one day a week.” Make sure you know when this is and be prepared to call at the right time.
13. “My dog/cat/hamster ate the invoice.”
14. “I can’t pay the bill.” Honesty might be the best policy, but it doesn’t help you. Negotiate a payment plan.
15. Ceased trading. Is there any way you can get your goods back ASAP?
Invoice Factoring and Customer Payment
Eagle Business Credit, an invoice factoring company, offers advanced payment on your open invoices. In addition to fast payment for your receivables, we offer back-office support and 24/7 online access to your account. With our free client credit checks, you can see which of your customers are at risk of non-payment. Our invoice factoring services also include collections. We will follow up with your customers courteously and ensure you have the working capital to continue operations and grow your business.
What Should You Do When Your Customers Are Taking Too Long to Pay?
Ian Varley discusses your small business possibilities when your clients are taking too long to pay their business invoices. Invoice factoring advances the payment on open invoices to your company.