Recovering overdue invoices from your customer base can at times be very tricky and not as straight forward as you may think. Apart from spending some of your valuable resources and time attempting to contact the late paying customer via phone or email, tracking down their location could also prove to be a pretty challenging task indeed. But what if you finally manage to make contact only to be provided numerous reasons and excuses as to why they cannot pay you back immediately?
Once you find yourself in this scenario you must have a response or strategy on hand to effectively manage these types of late paying customers. Responding appropriately may be the deciding factor on whether you will successfully retrieve the balance owed or not.
For those newbie entrepreneurs who never or rarely have encountered any credit/late payment issues, here are the most common debtor excuses and tips on how to handle them:
Debtor Excuse #1: “I will call you right back.”
Nowadays this is one of the most common excuses amongst many debtors. This excuse usually results in no call back and you having to chase up the debtor. Often it can lead to the debtor avoiding answering your calls altogether. There is nothing more frustrating (and risky) than a delinquent customer who promised to call in the future, then doesn’t.
Best Response: Don’t accept the response. Respond back to the debtor that the call will only take a minute and requires an outcome today as account is overdue for payment. Briefly then go into how much is owed and request payment today.
Worst case scenario – ask them to provide a time to call back that same day.
Debtor Excuse #2: “I am considering applying for bankruptcy or to liquidate my company.”
Another common tactic from delinquent debtors is to threaten to file bankruptcy or, if a company, to wind up that company.
The excuses are a well known tactic widely implemented by evasive debtors to further delay or hinder your collection attempts.
Best Response: If you have a delinquent debtor who threatens you with potential bankruptcy/liquidation, chances are they are simply trying to scare you to back off. It’s illegal for a company to knowingly trade while insolvent and this should be stated during your phone conversation. If threatening bankruptcy, ask for the personal insolvency company handling the matter and a bankruptcy number. You should also give them a thorough explanation about the ramifications of bankruptcy and/or liquidation and the impacts of each of these statuses personally. Placing the delinquent debtor on the back foot may discourage them from considering this type of action and also to make it clear that you are on to them and that you know the credit industry very well.
Debtor Excuse #3: “Sorry, but I never got the bill.”
Many experts in the debt collection industry greatly recognize this excuse as a stalling tactic. Delinquent debtors will state with confidence that they never received the Statement or Tax invoice in a blatant attempt to buy more time.
Best Response: Make sure that you know the dates of when you sent the invoice/statement and always have a copy of the bill or invoice with you, during discussions. If you have listened to this excuse during a phone call, quickly offer them a copy and obtain billing contact details. Providing proof of debt during the phone call will make it very difficult for the delinquent debtor to avoid or delay payment any further.
Debtor Excuse #4: “I need copies of all your documentation.”
When a delinquent debtor demands copies of all documentation pertaining to the outstanding balance, it’s generally a surefire sign the debtor is trying to stall proceedings. This is a common approach to either distract you from the task at hand (collecting the debt) or an attempt to escape liability of money owing.
Best Response: Provide all documentation to your debtor in the first instance and be in a position to provide proof documentation has in fact been received. As a professional debt collection agency we always forward all documentation (proof of debt) to the debtor along with the first letter/email from our office. This approach ensures the debtor has no excuses. We also have that same documentation ready to go at a moment’s notice. This is why you need to put an emphasis on keeping all of your records up to date.
Debtor Excuse #5: “It is not me who handles that, but I will pass the message anyways.”
A common excuse during discussions is for the person who answered the phone to deny accountability toward the debt.
Best Response: Ask for the contact number and e-mail address of the person who pays the bills and can authorize payment. Don’t forget to ask the person who you are speaking with what there role is within the business. This should help determine is the person you are speaking with is being truthful and also reduce the chances of being referred from person to person, or department to department.
For the most experienced business owner, having a list of responses for a variety of debtor excuses is imperative to increase the odds of getting your customers to pay on time.
Brodie Collection Services is a full-service agency offering a multitude of services and is one of Australia’s leading debt collection firms. Our objective is to provide you with expert debt recovery and advice at a price lower than the market cost. Our recovery approach is simple – we strive to get to the bottom of why you’re not being paid, then implement steps to ensure prompt payment. With 25+ years’ experience in debt recovery, we have undeniable results proving that debtors will pay once we become involved.
With offices in Melbourne, Adelaide, and Brisbane, we can assist with all your collection & recovery, legal support services, and credit risk management requirements.