According to USA Today, 40% of businesses said their receivables – money that customers owe – are coming in at a slower rate.
On average late payments are now received 48 days out. This is a six-day increase since 2011 and a 10-day increase since 2006.
The increased lag time makes it difficult for many businesses – especially small and medium-sized businesses – to succeed. When your money isn’t coming in steadily, it’s difficult to pay your own debts, invest in new endeavors and employ a rock star team.
To help you collect the money you’ve already earned, we’ve complied the top 5 excuses why someone makes a late payment. We’ve also recommended a quick fix to help you collect on time.
Excuse #1: I forgot.
It happens to the best of us. We all have a million things going on and we all have a million bills to pay. All the bills are probably due on a different day, too, making it even more difficult to remember what’s due when. Unfortunately for your customers, forgetting to make a payment often results in late fees and possible credit consequences. And unfortunately for your business, it can’t suspend operations (or worse, make its own payments late) because your customers are busy and forgetful.
Recommended fix: use an automated mass communication tool to deliver payment reminder notifications. At IVR Tech, we use our own system called
nResponse. It allows us to distribute an unlimited number of notification messages in just a few minutes. Messages are distributed according to customer preference (e-mail, text message or phone call) & always include a link to make an over-the-phone payment or a text message payment right in the note.
Excuse #2: I don’t have the money right now.
This one is tricky. Finances are a sensitive subject and many people don’t like to discuss them; especially if the subject has arisen as a result of a lack of sufficient funds. Fortunately, if you make it easy to pay bills at convenient times, and keep the lines of communication open with your customers, there’s a way around the “I’m broke” excuse, too.
Recommended fix: use a payment tool that accepts payments at any time. This way, if your customer has an extra $25 two weeks before their payment is actually due, they can make the payment early when they do have the money. At IVR Tech, we use a tool called PayIT. It’s an automated pay by phone app that enables our customers to call a phone number 24/7/365 & make a payment in any amount.
Excuse #3: I have no idea where my bill is.
Stuff getting lost is a part of life. It’s another unfortunate part of life for any business waiting to be paid because a piece of paper got lost.
Recommended fix: offer your customers the option of receiving e-statements. If there’s no hard copy bill, it can’t get lost. You can also try using a reminder notification service so that, even if a bill ended up in the wrong pile, your customer will still know it’s coming due and can pay it online or over the phone.
Excuse #4: I just got too busy.
Between hectic work schedules, soccer games, dance recitals & the occasional happy hour, who has time to pay bills? Even if the time becomes available, who wants to spend free time writing checks? The answer is no one. So how do you fix it?
Recommended fix: set up an automated bill pay option. This way, your customers don’t have to stop what they’re doing to pay bills. Another option to explore is an automated payment tool. As mentioned above, we use PayIT, which allows our customers to make payments over the phone or make a payment with a text message whenever they want to. This still requires that your customers take action by their due date, but it gives them the freedom and convenience to make the payment from the soccer field during half time.
Excuse #5: I procrastinated.
It’s easy to see how ‘pay the bills’ could fall so far down a to-do list that the due date passes. Unfortunately, this is a tough excuse to combat. You can’t offer one-on-one coaching sessions to help your customers learn to stop procrastinating (unless maybe you’re a life coach), so how can you reasonably expect a timely payment from a procrastinator?
Recommended fix: look into reminder notification services that offer escalation options. This way, your customers receive reminders until the required action, in this case payment, is marked as complete. This may seem like it’s an annoying thing to do, but your customers will actually appreciate it. Your reminders will help them avoid incurring late fees, accruing interest & damaging their credit. At IVR Tech, we use nResponse for this, too. Notifications are set to be delivered until a response is received. Then, we go away J. More of our customers have appreciated this than not & it has helped us significantly reduce the number of late payments we receive.
So there you have it! The top 5 reasons your customers are making their payments late. Hopefully this list will resonate & our suggestions will help you collect your hard-earned money faster. If you try any of these options out, please let us know by commenting on this post.