| There’s no excuse for
late payment
The Better Payment Practice Group (BPPG) is urging small to medium-sized
enterprises to be wary of the excuse-mongers who use delaying tactics
to hold up the payment of invoices.
Recent research from Experian shows that in the second half of
last year the average payment period across industries fell by 1.25
days to 67.5 days, but the BPPG is keen to stress that there is
still room for improvement.
Peter Rowe, Director General of the Institute of Credit Management
(ICM) and member of the BPPG, comments:
“Identifying and addressing customers
who use delaying tactics are key elements of good credit management
practice, and can be the deciding factors in getting paid on time.
“Excuses can be overcome if they are dealt with firmly and
positively. Businesses should narrow down the issues raised by the
customer as quickly as possible, set strict deadlines for payment
and ensure all conversations and exchanges of correspondence are
recorded properly.”
To help businesses, the ICM has identified some
of the most common delaying tactics used by businesses and offers
advice on how to overcome them:
“The director who signs the cheques is on holiday.”
A common excuse, especially during the summer months and before
and after bank holidays, but it is frequently used to delay payments.
The arguments given by debtors can be reversed and used to secure
payment. If you are told the director is on holiday, find out what
provision has been made for signing salary cheques and paying utility
bills. Normally in these circumstances signed cheques will have
been left to settle important accounts. You can put pressure on
the person dealing with you by stressing how important your account
is, making them feel they will be going against the wishes of their
boss by withholding payment.
- “The computer is down.”
Find out how often these problems occur and how long faults generally
last. If this is a genuine problem the debtor ought to be willing
to send a manual cheque. If they refuse, it will become apparent
they are trying to avoid payment.
- “The cheque is in the post.”
Ask for cheque and postage details. If they have not sent payment,
they won’t be able to answer your questions.
- “We are waiting for funds from
a large customer and can only pay you when these funds are received.”
Ask the name and address of their debtor and the expected date
of payment. The company should be able to arrange some form of
credit with the bank on the security of the debt. Suggest they
do this and find out how quickly this can be done.
- “We seem to have misplaced your
invoice - can you send a copy?
Ask whether this is the only reason for late payment and offer
to fax a copy immediately. If the debtor does not agree to pay
straightaway, they are admitting that their requests for copy
invoices were a delaying tactic.
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