If your invoice has fallen overdue for payment, ideally you will have a credit policy that will dictate when letters are sent and telephone calls are made to chase payment. It is important to document everything.
If your invoice remains unpaid, we would suggest you escalate to a debt collection agency or a debt recovery solicitor and you arrange for a Letter before Action to be sent. This is a formal demand for payment. Often this will prompt payment if your customer is just delaying payment. Prompt action gives you the best chance of a positive outcome.
What are the warning signs that a company may be delaying payment of your invoice? For those of you who are credit controllers, I am sure you could write a book on this subject.
Here are ten common excuses for why an invoice has not been paid
- The invoice has already been paid. Always request evidence of the payment to include, the method of payment, cheque number, amount, date of cheque, the date it cleared the bank and evidence of the clearance.
Bacs: always request the date of payment, amount and evidence this has left their account.
- I did not receive the invoice. It is always worth telephoning a company once an invoice has been issued to check they have received it as opposed to waiting until the invoice is overdue and then receiving this news.
- We disputed the invoice. Request evidence of the dispute raised. Often this is alleged but no details are ever received and it is merely an attempt to delay payment. If the dispute has not been raised already, request details during the telephone call and request they follow up with the dispute in writing within a specified timeframe.
- The person you need to speak to is not available. It amazes me how long this game can go on for. Usually telephone chasing calls are made in addition to sending statements and reminder letters. If after three attempts they have not returned your call I would suggest sending a Letter Before Action to push your payment to the top of the queue.
- Our terms are 60, 90 days etc. This is a very common response. It is usual that the supplier’s terms are what is relevant. Refer them to your terms and any information regarding how they were sent and accepted.
- I cannot pay you until my clients have paid me. Unfortunately this is far from acceptable but they are likely juggling cash flow issues. Unless you are willing to agree an extension, you will need to consider escalating this to a Letter Before Action to push you to the top of the queue. It is possible they do not have the funds to pay you. You should consider accepting a part payment and instalment which you should monitor closely.
- The company is in administration/liquidation. If this is the case then they should be able to provide you with evidence. Ask for the details of the administrators or liquidator and the reference number. You can contact the administrator/liquidator yourselves or ask your debt recovery solicitor to.
- I am in the process of changing banks. You could request evidence. The process these days is relatively swift. Although this could be genuine it is unlikely to result in any more than a couple of days delay. Agree a date and follow up.
- Nobody is in the accounts department. We hear so often how our clients are given the run around with this excuse and struggle to get hold of somebody when chasing an overdue invoice particularly in smaller companies. Ask to speak to the managing director or financial director.
- Asking you to make the invoice payable to another company. You should not blindly change the company you have invoiced. You will need to look into the reasons as to why they are alleging the incorrect company has been invoiced. Perhaps they are asking you to invoice a sister company that is about to go bust.
I am sure you have a bag full of funnier excuses than those above. We are putting together a list of top ten funny excuses that our clients have received for your amusement. Have you been on the receiving end of a funny/far-fetched excuse? Email it over to us at Debtfast@debenhamsottaway.co.uk to see if you make our top ten list.
A final point- mean what you say! If you say you are passing the matter to a debt collection agency or debt recovery solicitors… do it. It is important you mean what you say to maintain credibility.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.