5 Excuses For Late Payments & How To Deal With Them

It probably does not come as a surprise that late payments are not just a problem for SMEs and large corporates in Malaysia, but also for businesses of all shapes and sizes across the globe.

Dealing with late payments has become part and parcel in running a business. Reports suggest an estimated $3.1 trillion are currently stuck in account receivable for U.S businesses alone, writing off around $150 billion every year in bad debt from receivables that could not be recovered.

The decades old practice of late payments has proven to cause difficulties for businesses who have their own overhead and staff to pay, hence, suffer from numerous admin and cash flow issues in trying to stay afloat.

A study by SME Media Group and INTI International University reports 73% of Malaysian businesses suffer from late payments, getting paid on an average of 94 days for invoices with 30-day payment terms.

While recovering from late payments can be a hefty challenge, the most important thing to remember is that you have delivered your end of the bargain, and you have every right to seek for payment. Preparation is key in getting past the excuses provided by both vendors and customers, and taking a proactive stance when speaking with them will help you overcome these challenges.

In this article, we highlight 5 different excuses that customers and clients have commonly used when it comes to late payments, and the fixes you can utilise to ensure that you get paid on time while maintaining a good relationship with the said customer.

Excuse #1: “We have yet to receive your invoice”

Lost invoices happen to be one of the most common delaying tactics used by clients and customers. Whatever your product or services may be, ensure that you keep a paper trail on all your communication with your customers that will prove useful when you take necessary actions to recover these payments.

Here are two ways in which you can do to address this;

i) Request for email acknowledgement upon receipt of your invoice.
ii) Send email reminders before payment is due to ensure that the invoice has been received and any issues they have are answered prior to the due date.

Excuse #2: “The person in charge is not in today”

In any industry sector, the business should still operate as usual even in the absence of the person who issues the company’s payments. However, this excuse has been constantly used as a way to put off payments whenever the collectors come calling.

First of all, ask for the exact person you would need to get in touch with and when they will be available. Remember to make a note on their availability and call back then.

Alternatively, if that doesn’t seem to work out, ask for another person from the team to assist. Today’s technology has made it possible for clients to store proof of delivery, invoices as well as other types of important documents that would be useful to the rest of the team when the person in charge is not available for long periods of time.

Perhaps, to speed up the process, you can offer an alternative payment method and remind them of the possible interest charges should the payment be further delayed to prompt their immediate action.

 

Excuse #3: “We are waiting for payments ourselves”

In some cases, clients feel that they are entitled to withhold payment until their customers make payment to them.

While you may be willing to forgive the occasional delay, you might want to review your payment plan outlined in the contract with your client or customer, and reiterate the terms they have agreed upon in the beginning of the partnership.

Give them a new deadline and advise that any future services will probably require a deposit ahead of time or at the very least, a part payment or payments in the form of instalments to ensure that you receive some sort of compensation to cover your business needs.

Excuse #4: “There is a problem with the work”

Possibly the oldest excuse in the book, it is common for clients to withhold payment on the grounds that the work is wrong, or it was never signed off. And disputes regarding the work deliverables are often left unattended for as long as possible to cause delays in resolution, in turn, the need for payment as well.

From minor discrepancies to deliverable conflicts, the key here is, the more details you ask, the harder it is to get it wrong. The best thing you can do is to call before the invoice is due so that any feedback with the work is jotted down and gets resolved by the time payment is scheduled to be transmitted.

 

Excuse #5: “Our system is down”

While struggles with technology are understandable, they are also usually temporary. And blaming payment delays on technology is another way to try and excuse the fact that they are not able to pay you for your services on time.

The best thing to do is to ask when they can expect the issue to be resolved, and if arrangements can be made to send the payment using other methods rather than waiting by the computer.

With resources such as mobile banking and other various methods of payment available, there is no real technical excuse for not being able to provide payment by the time it is due.

 

Curlec: A Smarter Way to Collect Recurring Payments.

In an industry where chasing payments is commonplace, let outstanding invoices be a thing of the past. Curlec creates a seamless payment experience that enables you to get paid on time, every time via Direct Debit and Instant Pay (FPX).

Improve your cash flow – While traditional payment collections result in never-ending recurring late payments, Direct Debit automatically pulls fees from customer’s accounts whenever it’s due.

Automate Your Payments – As your customer base grows, collecting payments only becomes more and more of a hassle. Provide your customers the option of a more convenient, worry-free way of making payments and stay one step ahead in terms of convenience and flexibility.

Minimise employee workload – Direct Debit’s hands-off approach to recurring payment collections take the burden off your employee’s shoulders. The need for follow-ups are reduced and employees can then turn their focus elsewhere.

Want to talk to us about swapping your current payment solution provider to Curlec? Contact us below and we will get in touch soon!