Most business owners will be familiar with the types of excuses they get when their invoices haven’t been paid in time. Excuses such as ‘we never got the invoice’, ‘our systems have been down’, the person who authorises payment is on holiday’, ‘you’re on the next payment run’ etc etc. Unfortunately these excuses are all too common and we all know they’re fake. So what are the real reasons for late payments?
Well, there tend to be four main reasons for late payments. They are:
- Financial problems – the business that owes you money are having their own cash flow problems. People aren’t paying them so they’re not paying you. It’s a vicious circle.
- Intentional late payers – these are businesses that had no intention of paying you on time anyway. They operate their own internal payment processes to suit themselves and their cash flow and they will pay you when they’re good and ready. The supplier comes a poor second, unfortunately.
- Admin issues – these are businesses that don’t intend to pay you late; they’re just so disorganised that they haven’t got the right people or processes in place to facilitate timely payments.
- Disputes – often used as a stalling tactic by businesses this is when they are disputing an element of the job that you supplied and they will not pay until the matter is resolved. In these situations, you need to get them to be specific about what they are disputing and get it in writing. These things can really drag on if you’re not pro-active.
With any of the above scenarios, there is no reason why you should have to put up with it. If a business owes you money and they are late on paying then there are commercial debt recovery processes that can be put into action. The longer you leave it, the more difficult it becomes to get your money so we always advise our clients to act swiftly.