Most Common Late Payment Excuses And Their Solutions
With over 60% of all invoices paid past the due date, there are many excuses customers use to not pay on time. To avoid harming your cash flow due to late payments, take a look at the following common late payment excuses and how to handle them.
We Didn't Get An Invoice
While it’s possible to lose an invoice once in a blue moon, this could also be a stalling tactic from the customer. For example, consider it a red flag if a customer waited until the due date to let you know that they hadn’t received your invoice.
Take a look at how an invoicing software can help you avoid this:
- You can set up alerts so that you can get notified when a customer views your invoice, using Invoice Ninja.
- The QuickBooks system records the time that a customer viewed an invoice, for future reference if a dispute arises.
We Never Received The Goods
A common reason for a customer delaying payment is when they claim to have not received the goods or services from you. If you are providing digital services, you can simply resend the work in an instant.
However, for physical goods, it is tricker. The best thing to do is to use a tracking service for the package. Additionally, insuring packages is a way to limit your risk in these cases.
To avoid these issues, you can use certain integration solutions with your invoicing software:
- Eversign with QuickBooks will help you obtain a legally binding signature when goods are received by the customer.
- DocuSign API with FreshBooks can be used to request a signature upon completion of a contract, such as upon sending goods and services.
I Have Cash Flow Issues/ I Need To Get Paid Before I Can Pay You
Cash flow problems are common for businesses around the world. Using invoicing software, you can set up an automatic application of a late payment fee to avoid sending an overdue invoice letter in the first place and having to chase your payments.
Software solutions can help:
- Invoice2Go helps you set up late fees by editing the invoice.
- The late fee manager on Xero lets admins set flat-rate late charges, percentage-based late fees, or a mix of both.
We Forgot
It is not uncommon for invoices to get buried in countless emails for a busy client. For example, your client just returned from a week-long holiday. After getting back, she might not find the invoice you sent two weeks ago.
Instead of suffering negative cash flow due to your client’s affairs, upgrade your accounting process in the following ways:
- Set up email reminders to alert your client about due dates using Square Up.
- Receive early or on-time payments by creating up to three invoice automation reminders via Invoice Ninja.
The Invoice Is Incorrect
Did you know over 61% of late payments occur due to incorrect invoices? For example, if you entered incorrect bank details or quoted $500 for 5 hours instead of $1,500 for 15 hours of work, the invoice won’t be paid on the spot. This is common when your accounting process involves manual data entry. By switching over to billing software, errors are eliminated as the system is automated.
Take a look at how an invoicing platform can help you send error-free invoices below, and cut down your late payments:
- Xero offers a unique integration with Watchful Eye to detect errors and anomalies in invoice data.
- Invoice Ninja integrates with Stripe to automatically add accurate billing details.
FreshBooks uses a time tracking feature to automatically create precise invoices based on billable hours.
Conclusion
Late payment can lead to delay in accounts payables such as employee payments and utility bills, besides ongoing business expenses.
With the help of invoicing software, admins can set up various functions such as payment reminders, late fee application, and error-detecting methods to help get paid on time.
Choose a good software that complements your business needs so that you can keep late payments to an absolute minimum.
