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Legal Collections – 10 common excuses not to pay

Posted
November 25, 2014
Debt Collection

Well I would be remiss if I didn’t mention, even if I don’t include, “the cheque is in the post” as it holds legendary status in the collection world, the excuse we have all heard time after time after time. Thankfully it’s been put to sleep by the growth and accessibility of internet banking but it still crops up from time to time. Thankfully, we can now dismiss it! But what else do we hear with monotonous regularity? Whilst the debtor silently congratulates himself with coming up with something so staggeringly plausible? Here are a few we hear of day to day:  

  1. “I’ve not been paid by my customer!” Why do debtors feel it is okay to withhold payment until they get paid themselves? Obviously you are going to tell them that this is not an acceptable reason to withhold payment, but ask some searching questions, how much are you owed? Is it one customer or multiple? How overdue is it? When are you expecting payment? Have you conducted any investigations into the financial health of the customer? Being asked a number of probing questions may tip the balance in your favour as they will not be keen to provide this level of information.
  2. “Director or cheque signatory is not available” or on holiday. How many times a day do we hear this? More often or not it is simply used as a delaying tactic but it can be very frustrating. Try ringing at different times of the day even before 9am or after 5pm, ask for confirmation of a suitable time to call when someone will be available. Ask to speak to another decision maker or Director, ask for mobile numbers and email addresses. If the address is local mention you are happy to pop in and wait to see someone. Above all don’t get cross; they are just trying to defer you for a period of time. However, if it continues for too long you need to heed the alarm bell that there may be some financial trouble brewing.
  3. “Need a copy invoice /statement” again this is often perceived as a ruse to delay payment. Ask if non-receipt is the only thing holding up payment and then scan and email it for quickness. If you are aware that this is a frequent delaying tactic used by your client, then factor it into your credit control process, make a quick courtesy call to ensure safe receipt and confirm there are no issues to prevent payment at issue, they’ll soon cotton on that you have!
  4. “Accounts only work between 2pm and 2.30pm on a Wednesday” believe it or not some Bought Ledger Clerks are employed part time and as implausible as it may sound to you, there may be some truth in it. However that person’s boss may still be available and once you know their shifts you can call at the appropriate time.
  5. “The signatory had died” obviously this is a tricky situation to be in, but a limited liability company, PLC, LTD or LLP will carry on and should have alternative arrangements, a partnership will have other partners to take responsibility; however sole traders will take some time to sort out. Ask who is dealing with the matter and take their contact details and ask expected timescales until funds will be released. A sympathetic response is usual with a short hold to allow things to be sorted out.
  6. “The invoice is disputed” again can be frustrating if the first you are hearing about it is when the invoice has gone past due. A genuine query should be addressed quickly to resolve it. Agree what you are going to do and timescales and then write to confirm.
  7. “We are changing banks” changing banks is a lot simpler these days and the possibility that a change would leave a company with no access to funds is unlikely to say the least. Ask if they have a company credit card they can still use or a personal cheque from a director or shareholder this may focus their minds a bit.
  8. “We are in Receivership / Liquidation / Administration” are they really? This is sometimes used as a scam believe it or not! Ask searching questions, how the business ceased trading, has it actually closed and what was the actual process; ask for details of any insolvency practitioner involved so you can contact them.
  9. “We didn’t receive the goods” this could be a genuine misunderstanding or a ploy to gain a couple more weeks credit whilst you chase your tail looking for proof of delivery. However technology these days is wonderful tool, many documents are instantly retrievable and can be sent by email for an immediate resolution to this unlikely scenario! Make sure you get a commitment to prioritise the invoice for payment.
  10. “Can’t pay it sorry” sadly becoming ever more frequent and harder to deal with, with a company debt you may, depending on your Terms and Conditions and product, have recourse to recover your goods, if not you have a decision to make as to how you approach. If it is a business, ask for details as to what the issue is and what contingency the business has for cash flow problems, i.e. a directors or bank loan. An individual may have financial difficulties which you can explore by way of an Income and Expenditure schedule, if they genuinely cannot pay in full then agree a short term instalment plan to see them through their current crisis and agree a date to review their finances in the future. Demonstrating forbearance inevitably yields a better return in the long run.

  Of course these are just the most frequent ones we hear, but they don’t stop there. So maybe I should put together a list of the most unusual for another time!!!

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