How Do You Deal With Excuses For Non-payment

How do you deal with the dozens of excuses that customers can come up with for not

paying their account? Does it work to simply respond with the threat of legal action or referral of the debt to a debt collection agency?

Here are some of the classic excuses and some helpful ideas for how to respond.

Payment has been made

How do you respond when you know that payment has not been received?

What you can do is ask them for remittance details. For example, when was payment made? What was the payment method? Who initiated the payment? Do they have a receipt number or some kind of proof of payment? These questions usually help ascertain whether payment has actually been made. Sometimes failure to receive payment may be due to payment to an incorrect account or lost mail.

'The cheque's in the mail'

This would have to be the all time favourite. But again can be easily responded to by asking them when they sent the cheque and where to. If the cheque is not delivered within a few days of what has been promised, you have good reason to make a follow up phone call to ask such questions.

At this point you can be sympathetic with the customer and suggest they check their bank account in case someone else has received it and tried to present it for payment. If it is for a large amount you might even suggest they put a stop payment on the cheque.

'Waiting on payment by their customers'

Well you certainly empathise with this excuse because that is exactly what you will have to tell your suppliers if your bad debts aren't recovered. Remind them of your trading terms and advise them their credit may be suspended on future transactions.

Most terms of trade are contractual arrangements between you and your customer. Therefore, there is no legal basis for your customer to delay payment because they are waiting on a payment from one of their customers. You should advise your customer of this.

Insurance company was supposed to cover that

This is possible depending on the service, of course. However it is not a viable excuse for the non-payment of an outstanding debt. The responsibility is for the customer to make sure the debt is paid. This obligation should be reiterated to the customer. Make sure they follow up with the insurance company and get them to give you the details of how the payments were made or when it can be expected to settle.

When do you know it's time to call in the debt collection agency? It is not advisable to carry bad debt for too many weeks. It hurts your cash flow and, in turn, your business. If you feel you've given the customer a fair chance but they still aren't honouring their debt hand it over to the experts.

by: John Zukerman

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