In these uncertain times, it's important to refute late payments, get your invoices first in line for payment, and try to get paid immediately by offering your customers automated ways to pay.
As the economy continues to dawdle along, many businesses are trying to delay payment of your invoices to improve their cash position. In this environment, it’s more important than ever to refute common excuses for late payments, and to get your invoices first in line for payment. Better yet, you can often get paid immediately, or nearly so, by offering your customers automated ways to pay.
I work in the credit department at a major supplier of automation components, and all of our billings are business-to-business. I’m the sole cash application specialist for my company, and as such I occasionally take and make collection calls, especially for problematic accounts. As one might imagine, I’ve heard every manner of creative and not so creative excuse from our customers as to why they haven’t paid our invoice just yet.
As shown in the list below, the top ten common excuses include the number one all time favorite, the check’s in the mail. This list isn’t comprehensive, and customers will surely think of new reasons not to pay on time in the future. But virtually all late or non-existent payment excuses can be addressed via a few techniques that automate all or part of the payment process, with the most popular being payment via corporate credit card.
To process credit card payments, one must first set up a mechanism for processing these transactions. Your company’s bank can help, and it’s often possible to negotiate either no or a very minimal upfront fee, especially if your firm does significant business with the bank. Even if a minimal fee must be paid upfront, along with the required per transaction fee—it’s often worth it to receive payment virtually immediately, especially when the alternative is to let the customer postpone payment.
Another advantage to accepting payment via credit card is that most processors will store your customer’s credit card information in a secure database. This makes it very easy to receive payment from a customer because all that’s needed are last four digits of the credit card number and the expiration date. If your customer has an invoice that’s past due and you’re not releasing the order till you get payment, a credit card is a very effective way to resolve the standoff.
For customers that don’t want to pay via credit card, an alternative is Automated Clearing House (ACH) payments, set up in cooperation between your company’s bank and your customer’s bank. With ACH, payment is usually received within 48 hours, not as quick as with a credit card but certainly faster than waiting for a check.
The newest procedure for speeding payment is processing a copy of a check that’s faxed directly to you or to your general accounts receivable mailbox. Once the check is received, it can be immediately processed for payment online by your company’s bank through a secure web site. It takes some effort to set up this service, but it’s well worth it as in many instances funds are available the very next day.
What’s in it for your customer? First, your customer’s costs will be reduced as it’s less expensive to pay electronically as opposed to printing, signing and mailing a check. Second, your customer may get cash back or frequent flyer miles from their credit card issuer. Third, a receipt for payment can be automatically and immediately sent to your customer, allowing them to close the books on the transaction without waiting for a cancelled check or other proof of receipt of payment.
All of these automated payment procedures allow you to address most late payment issues in real-time with your customer while you have their undivided attention on the phone. If your customer is truly committed to paying the invoice, it’s to your advantage to make it easy for them do so, even at the cost of a few dollars in fees or a bit of time of setup time.
Top Ten Reasons Why You’re Not Getting Paid Just Now
- The check’s in the mail;
- Never received the invoice;
- Invoice went to the wrong department;
- The P.O. doesn’t match the invoice;
- The controller, or other manager, is out;
- A second signature is required;
- Invoice isn’t due yet;
- Never received the invoice, please re-send;
- Need to receive a credit first;
- Already addressed this matter with someone else at your company.
