Top 10 excuses for late payment – and how to tackle them

“My dog ate my homework” excuses are rarely tolerated at school, but it seems that small businesses are regularly accepting feeble justifications from customers who don’t pay up on time.


According to recent research from Dun & Bradstreet, businesses are taking a whopping 52.1 days, on average, to settle their debts. The main culprits are large companies with over 500 employees, placing a crushing burden on small firms.


All of this is, of course, avoidable. Christine Christian, CEO of Dun & Bradstreet, says that small businesses have gotten worse at chasing late payments.


“You deserve what you get – if you’re lax, your customers will drag out the payment,” she says. “Small firms got better during the GFC when the banks tightened up credit. It was a forced education.”


“But they are becoming lax again now. Many have a sense that if they push customers for payment, they will lose them, which is nonsense.”


So, what are the most common excuses for late payment that you will hear as a start-up business? We outline 10 of the worst offenders, as well as explain what you can do about them.


1. I haven’t received the invoice

An oldie, but still a favourite among debtors. “All you can do here is re-send it and ask for a confirmation,” says Christian Vollbehr, executive vice president, Asia Pacific, at Coface. “Do this by either read receipt on email or fax it or mail it and call up to ask if they’ve received it straight away.”



2. We require a purchase order number

This request can befuddle many small firms, but if you are dealing with another small business, be wary. “Very large companies often can’t process payment without a purchase order number, but I can count on one hand the number of SMEs that have such sophisticated applications themselves,” says Christian. “It’s often an excuse, but often all you can do is provide the number.”


3. The product was faulty

Under warranty laws, you can’t misrepresent your goods or service and customers have the right to return items. A genuine product fault is one thing, but if the customer is just unhappy that goods aren’t exactly as expected, they could be just using it as a cover to avoid payment.  


A common issue for online clothing retailers, the problem can be solved by presenting the confirmation documentation that shows that you delivered what was purchased. If everything tallies up, you should be paid. The key here is making sure that you are completely clear to the customer about what they are getting – any ambiguity will cost you.


4. The debt isn’t due

Payment terms are usually either 30, 60 or 90 days. If, like most small firms, you need a 30-day turnaround to aid cashflow, don’t be deterred by late payers who insist that the terms are different.


“On your first shipment, you should have terms and conditions on the invoice,” says Vollbehr. “If you make sure that the delivery is to your customer’s satisfaction, you are fairly safe here. You’ve stated a timeframe to be paid in and you should hold to that.”


5. The person who signs the cheques is away

This irritating excuse can drag on for some time, along with the perennial “our systems are down” line.


While most companies require two signatures on cheques and an absence is a genuine reason for delay, it can be used as a diversionary tactic. Try to call your customer early in the morning or late at night to catch them off guard or ask to be transferred from another department in order to get through to the person you need to speak to.


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