6. You’ve messed up
Numerous disputes can arise between supplier and client. This can range from customers claiming that the product arrived too late for them to use to the shipping address being completely wrong.
“For some customers, there’s always something that’s not quite right,” says Vollbehr. “Make sure that you get all the details of the order and delivery in writing. Taking orders over the phone can be risky as you may not be able to cover yourself.”
7. We’ve got a cashflow problem
This is probably the most honest of all the reasons you’ll be given for not being paid. Providing an extension or a payment plan are the most common solutions to this, but make sure you get this all in writing. Never casually agree to late payment verbally.
“No one wants to send the bailiff around, but if this happens the first time a customer buys from you, he’s cheated you,” says Vollbehr. “If he or she is a regular customer, you can understand it a bit more. As long as it happens as a one-off, you can be a bit more lenient.”
Longer-term, you need to do due diligence on all your customers. Know who you are dealing with – get all of their details and continually check on their financial health. Don’t just assume that they will always pay you.
“A credit check can cost as little as $3 – there’s no excuse to not to it as it’ll save you so much down the track,” says Dun & Bradstreet’s Christian. “Make sure you track customer history and have a solid accounts receivable process. Use a good system like MYOB.”
8. We’d rather pay in a lump sum
Sometimes, a customer will want to pay for 10 invoices at once, rather than one at a time. This is fine if they do it up front, but problems arise if they conveniently forget one invoice in the lump sum they give you.
Combined payments can also cause cashflow issues that can turn into a major headache for your business. Most of the time, small firms are just happy to receive the money, but if this arrangement contravenes your purchase agreement, don’t be afraid to decline the offer.
9. We want you to scratch our back first
Some customers can try horse trading if they are unwilling to promptly part with their cash. They will attempt to convince you to buy their products or services before they pay for their order.
There is no obligation for you to do this and it is, in fact, often good practice to avoid buying from your customers.
“This kind of request is absolutely no reason to delay payment to you,” states Christian.
10. Why should we put you ahead of our large customers?
Companies can try to brush aside small firms by making them feel unimportant compared to other suppliers and large customers. The truth is that no customer should be too busy to pay up on time.
“The simple response to why they should put you first is that you have a 30 day payment term and that you require payment to honour that,” says Christian.
In general, most late payment problems can be eliminated by good invoicing procedures and tenacious chasing of debts.
“All of these excuses show that administration is the biggest hurdle for small businesses – but it’s a hurdle they’ve created themselves,” says Christian. “You need to ensure there are no excuses – invoice to the right address, spell out the terms of trade and get on the phone straight away if payment isn’t received.”
“Don’t wait until the end of the month, when you’ll have to scramble around for the cash. If you’re the first in the queue, you’ll be the first to be paid.
“You should issue invoices promptly. So man firms wait a few weeks after the goods have been shipped.”
“You should do it straight away. Many small businesses don’t do this because they don’t understand the value of cash – larger firms understand that they shouldn’t be acting like a banker for their client.”
If verbal and written reminders don’t work, don’t be afraid to use a debt recovery service.
“Generally, businesses should do this within 60 days, if the payment term is 30 days,” says Christian. “Small businesses used to think that they were too small for debt collection services, but we’ve seen a significant increase in the use of debt collection in the last 12 months.”