How do you really feel about your clients who don’t pay on time? Do you believe it’s just business as usual or are you concerned that late payments could negatively impact your company? If this describes you, then it’s time to take action! Late payment causes cash flow issues, wreaks havoc on employee morale and turns off new customers.
Read on to learn the top 10 most typical late payment excuses and how to overcome them.
1) Procrastination
It’s easy to write off your failure to pay on time as just plain procrastination. However, it could be that you don’t have adequate expense management software or recurring billing software in place. These tools can help you stay on top of bill payments so that they aren’t lost in a heap of stuff I have to do later. This way, if a payment is due today, you won’t forget about it and will make sure you pay on time.
2) Fear of Rejection
There’s a difference between I can’t afford it now and I don’t want to pay you. Sometimes clients will rationalize their own decision-making process, telling themselves that you’re not really worth paying for. There are also those who have trouble parting with money in general, especially recurring payments. Many invoicing solutions offer free trial periods to get your foot in the door.
3) Information Lacks
The most typical late payment excuse is when a company says, We didn’t receive your invoice. The first thing to realize here is that companies have automated billing and tracking now more than ever. Any legitimate business will be equipped with expense management software, recurring billing software or cash flow software for their clients. If a company tells you they never received an invoice, it’s likely just an excuse to get out of paying what they owe.
4) Sunk Cost Effect
The sunk cost effect is one of psychology’s most pervasive and well-documented biases. It refers to our tendency to irrationally invest in lost causes, as a way of avoiding uncomfortable feelings about waste or failure. When we make an investment (whether it’s time, money, or some other resource), it’s difficult for us to let go of that investment if things don’t turn out how we wanted.
5) Inefficient Time Management
It is said that time is money. When you get paid, invoice your clients quickly. If they don’t pay on time it means they are not as serious about doing business with you as you are with them. It also means their expense management software, recurring billing software and cash flow software might be inadequate for your needs. This can result in unnecessary delays or even loss of an important client! As a business owner, try to make all efforts to send invoices on time.
6) Lack of Self-Discipline
Business owners often struggle with self-discipline and perseverance. They have an idea, but they don’t follow through on it. Instead of starting their own business or putting in their own hours to ensure its success, they wait around for that perfect moment that never seems to come.
7) Unrealistic Expectations
It’s understandable to expect your customers to pay on time, but that doesn’t mean you should take it personally when they don’t. They may be experiencing cash flow issues and need a little extra time. In such cases, offering them a discount or incentive for their delayed payment can help your business retain valuable customers and bring in extra money at no cost to you.
8) Other People’s Problems Seem Bigger Than Your Own
When a client says they’re having trouble paying on time, it’s easy to dismiss them as lazy or nonchalant about their responsibilities. But there may be bigger issues at play than an unwillingness to pay up: larger personal and professional responsibilities or pressing financial concerns that stand in the way of paying invoices. To keep your business afloat while still understanding your clients’ problems and limitations, consider giving them a break with discount options like payment plans, discounts, or even offering extra services.
9) Stubbornness
One of the most common excuses for late payments is also one of easiest to overcome. Many people are willing to pay but simply refuse to do so because they don’t want to admit that their budget doesn’t allow it. If you can’t get customers to pay on time, it could be because they think they won’t be able to afford it or, worse yet, they don’t see a reason why they should.
10) Perfectionism
This happens more often than you’d think. We want to do everything right and hire a bunch of specialists so we can over-deliver and make our customers happier than they’ve ever been—but then we run out of cash and/or can’t finish on time. If you’re bootstrapping your business, try starting small and working within your limits to get an MVP product into people’s hands.
SOURCE: Top 10 Most Typical Late Payment Excuses and How to Overcome Them?
