Possible Reasons for Late Payment & Measures to Overcome them
Delivering product or services in return for payment is the regular practice of businesses. But, not all clients are prompt when it comes to payments. Once the organization accomplishes the task assigned, the clients tend to give excuses to delay the payments. In the worst-case, the client may even deny the payment completely, and this could be quite frustrating for the businesses. Also, the unpaid invoices or delayed payments could hurt the business cash flow. On the contrary, the clients may give several reasons to delay their payments. But, the company has to take the measure to accelerate the payment process. At the same time, it is mandatory to maintain a good rapport with the client and avoid confrontation. Here are a few reasons for late-payments and measures to overcome it.
The Blame Game
At times when the company's cash flow is tight, the clients tend to delay the payment. Also, they could pay late because of their delayed receivables. In such cases, the organization should make sure that it tops the priority list of payments by doing a regular follow up and courtesy calls as a reminder.
The clients business may be going through tough times and they would be unable to do the payment. This is quite a challenging situation and could directly affect the company's receivables. To avoid this condition the company should supervise the customer's portfolio to check if the client is undergoing such problems. If the customer is actually struck in financial difficulty, act immediately to get the payments done quickly with regular follow-ups.
Certain company would not maintain organized accounts. A disorganized accounting department might take time to track the payments and process it. This scenario could be encountered in startups. Such customers would need higher attention than others. The company should regularly remind the client of the payments that are nearing the outstanding dates. In spite of the reminder, if the client is not responding to the mails or calls, approach the person responsible for payments to get the job done.
The client may not be satisfied with the product or service and retain the payment, and may even complain, as an attempt to seek a reduction in the payment. In this case, if the client's disagreement with the product or service is well in advance to the invoice payment deadline then, the complaint could be genuine. In this circumstance, discuss with the client and end the dispute by agreeing to a corrective measure and get paid. To avoid such problems being repeated, the organization could include a clause in its terms and conditions, stating that the complaints pertaining to the quality of work should be made within specified days of invoice being issued, and after which complaints would not be accepted.
Late payments may have several reasons, which could be genuine or fake. With time, the organization would gain experience dealing with these issues. Eventually, a company can create efficient invoicing policies to reduce the late payments.