Part of dealing with customers is to make sure that they are satisfied, respond to their questions on time and deal with any objections that they might have.
When payment date arrives, the table turns. Your clients will give you various reasons why the invoice is yet to be paid and will provide you explanations regarding what needs to happen in order to release the payment.
For your convenience, we have prepared a list of most common excuses we have seen over the years.
I did not receive the invoice – sounds very straightforward. You surely can not expect your clients to pay if they have not received the invoice. Sometimes it is the case, in other cases, it is just an excuse. Either way, these days both are easily fixable. As long as you have proof that invoice was sent and delivered, you can easily eliminate this excuse and ask for speedy payment. Most invoices these days are sent via E-mail, so the details are easy to pull (as long as you haven’t misspelled your client’s email address). Some clients demand to receive a hard copy invoice. Consider sending invoices with a courier (UPS, FedEx, registered USPS) certain threshold.
The project/goods/service wasn’t delivered or wasn’t delivered in full or as described – one of the most common objectives. Many times the client doesn’t fully understand what payment milestone means. In other cases, they try to get a little extra for the same cost. In few cases they are actually might be right and you have some extra work to do. In order to avoid all of the above, make sure to clearly describe the service or product that you are selling and define clear payment terms. It will not only save you some arguments with clients (which is never great for client satisfaction scores) but also will enable you to forecast your cash flow better due to more consistent payments.
I do not understand the invoice – not all clients are financially savvy. Some buyers honestly do not understand the way your invoice structured, others expect to see different items/item description/amounts/etc. No real hack with this one, besides taking your time and walking them through the document. If your contract or meeting notes are clear, you will have no problem to do so and refer to these documents. If, over time, you notice that clients consistently complain about same wording your description, consider changing according to the feedback you receive.
You billed me wrong amount – this one is a combination of the last two. Rarely, there will be a typo on the invoice. Most often, client whom states the above either cannot understand why you billed him the above or believes that you should have billed lower amount due to various reasons. Again, having a detailed contract can be handy. But, before you start digging in it, best ask as many questions possible, to understand client’s reasoning and point of view. It will shorten the back and forth and will help you to resolve the objection faster.
We have already paid – a dream scenario. Or, is it? If the client has already paid, it is much more difficult to demand payment. Some clients use this tactic to delay payment. After all, the check is in the mail so you probably cannot be mad at them – it’s USPS fault! Payment terms are in place in order to account for these cases exactly. If you agreed on net 30 payment terms, your client had 30 days to arrange payment – more than enough for the check to be delivered, or for payment to hit your bank account.
If the client made a wire or ACH payment ask for remittance. Even in a rare case, that bank made a mistake, it will be easier to track the payment. If it wasn’t made yet, you will no get one.
In case that check was sent, ask if there is tracking and when was it sent. If there is none, or more than 3 days passed, ask for the client to cancel the check and make a wire.
Bonus Scenario – client claims that payment was made a few months back. In this case, ask for date and details to track it. Ofter, if the agreement has several similar amounted payment client confuse payment for a prior invoice that was already settled with the request for payment related to the new invoice that is currently outstanding.
To conclude – create as many interactions as possible with your clients. This is the only way possible to get a response from them and understand what is blocking payment. It is best practice to automate payment reminders. With the systematic process, you can save time and assure that all invoices are being followed up on.