Collecting payments from customers is not a cakewalk. In the B2B domain, every customer and their business display unique payment behaviors. As a result, businesses often face the consequences of delayed payments as the payment due dates approach.
Customers often give excuses to delay invoice payments. But as a business, you can proactively take measures to avoid delayed payments from such common excuses. By also studying your customer’s payment behavior, you can actively strategize to facilitate prompt payment.
5 common excuses customers give to delay payments
“We’ve initiated the payment and the transaction should be done soon.”
Ask for proof of payment initiation - what mode was it, to which account it was made, and by who it was approved by their internal team. If they haven’t done it, they wouldn’t be able to give the right answers.
“We haven’t received the invoice yet.”
This is a common reasoning given to customers. While it is genuine in some cases, many times companies do this to avoid immediate payments. If you have already sent the invoice before the due date, resend a copy along with the initial date on which the invoice was sent.
“We have a dispute with the invoice.”
Invoice disputes typically revolve around three main areas:
- Price discrepancies
- Product or service concern
- Payment terms
Anticipating these disputes can be challenging, particularly when using outdated billing systems. Communication gaps between sales, finance, and dispute resolution teams can further contribute to delays. To address these issues, it is crucial to identify and rectify any shortcomings in your collections process.
“We have already made the payment.”
This is another common statement you get to hear from customers when you identify overdue invoices. In some cases, it could just be a tactic to delay payments but it can also be that there’s a mistake in how the invoices are reviewed and matched internally. Ensure your cash application process is at check and regularly matches unpaid invoices.
“We are unsatisfied with the product or service.”
When selling on credit, it can be challenging to anticipate the quality of your product or service well in advance. However, you can minimize delays by maintaining regular communication between your sales team, a customer success team, and among themselves. This ensures that various checkpoints are met before the payment due date arrives.
Preventing late payments is not an easy task. For every single day delayed past your due date, you risk your DSO going up and or loosing the opportunity of having cash in your account to help in your business needs. By being proactive and encouraging on-time payment, you can mitigate the risk of delayed payments.
5 ways to improve your accounts receivable collections
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Streamlining your collections process
Using ERPs can result in inefficiencies, delays, and inaccuracies in critical collection activities such as tracking overdue invoices, contacting customers, and managing payment arrangements. Switch to purpose-built AR software that understands complex business needs to enable faster collections. It will help automate, personalize, and integrate with other systems to bring a seamless workflow to your collections process.
Developing collection strategies
Collectors today gather information from spreadsheets and siloed data, potentially causing them to overlook prioritizing at-risk accounts. Additionally, manual work can be burdensome, resulting in collectors failing to address all accounts, including high-priority and high-value debtors. A collections software such as Growfin can assist in developing custom collection strategies to prioritize accounts based on customers' previous payment behavior. This ensures that important accounts remain well-managed and attended to.
Automating invoice sending and reminders
Manually sending out tens of thousands of invoice reminders is not practically viable in the long run. Today, collections teams gather data on pending invoices and reminders from Excel sheets and send emails from a shared email address that appears automated. When emails lack personalization, there is a higher likelihood of customers ignoring them. By utilizing a purpose-built AR tool like Growfin, you can not only automate the process of sending invoices and reminders but also take it a step further by personalizing them. This approach ensures a higher response rate from customers, encouraging timely payments before the due date.
Drafting clear payment policies
Establish transparent and well-communicated payment policies that outline expectations, preferred payment methods, and consequences for late or missed payments. Make these policies readily available to customers through multiple channels, such as your website, invoices, and customer communications.
Offer Convenient Payment Options
Provide customers with a variety of convenient payment options to choose from, including online payment portals, automated recurring payments, electronic funds transfers, and credit card payments. By offering flexibility and convenience, you can encourage prompt and hassle-free payment.
Navigating through these excuses and many others is not an easy task. But with proactive measures you can ensure there’s on-time payment from your customers. And what better way to get this done than upgrading your current legacy systems to an automated and purpose-built AR tool?
Growfin offers businesses the means to streamline their collections process effectively. By automating key tasks, personalizing communication, and providing advanced analytics, it enables organizations to optimize their collections efforts, reduce manual labor, and improve overall efficiency. With its user-friendly interface and comprehensive features such as automated invoice management, personalized reminders, and robust reporting, Growfin simplifies collections workflows, accelerates cash flow, and enhances customer satisfaction.
To learn more, book a free demo today.
