No matter what your industry, getting paid on time is of utmost importance to you and your business. As a small business owner, it’s hard to keep track of your growing number of payments and customers – leading to late payments, lost accounts, and higher costs in the long run. But with the right tools, you can easily collect and manage customer payments so that late payers don’t give you trouble down the road!
To help you get started, here are the top 10 most typical excuses for late payment. And more importantly – how to overcome them!
1) Procrastination
A problem many small business owners have to deal with is cash flow problems, which often stem from procrastination. If a client is late on payment for a job, for example, it can affect your cash flow because you may have to spend money upfront that you’ll never get back.
2) Fear of Rejection
What’s worse than making a sale and then never getting paid? According to small business owners, it’s making a sale and then having clients give you excuses for why they can’t pay. Of course, there are some instances when payment is delayed due to extenuating circumstances, but there are also a number of dubious excuses that clients use as an excuse not to pay on time.
3) Information Lacks
The late-paying customer may claim that it didn’t have enough information to make a decision. Your supplier may not have given it all of your contact details or pricing, or they may be saying they don’t understand your product or service. You can overcome these obstacles by providing more detailed information, such as a longer proposal and improved FAQs that give your customer everything they need to know about you and what you offer.
4) Sunk Cost Effect
One of Your Biggest Enemies in Business : According to popular psychology, sunk cost effect is best explained as a cognitive bias where people irrationally justify increased investment in a decision because they have already invested money or resources into it. The theory here is that once you've paid $500 for your favorite pair of running shoes, you're more likely to run in them even if they don't fit properly.
5) Inefficient Time Management
When you’re strapped for cash, it can be tempting to work as many hours as possible at your current job. But beware—in addition to burnout and increased stress, if you can’t spend enough time honing your skills in a single job, that means you’ll end up limiting yourself when it comes to finding a new job with higher pay.
6) Lack of Self-Discipline
Many businesses refuse to pay invoices on time because they’re simply poor at managing their own cash flow. This means that many invoices are paid late due to a lack of discipline and not due to any real excuse or circumstance. If you fall into this trap, use expense management software, recurring billing software, and/or cash flow software to get a handle on your personal financial situation.
7) Unrealistic Expectations
It’s important to keep in mind that no software solution can help you get out of debt on its own. The only way to do so is through hard work and smart decisions, which means being realistic about your expectations. For example, if you have an existing business and want to switch over to recurring billing, there’s a good chance it will take a while before you begin realizing savings.
8) Other People’s Problems Seem Bigger Than Your Own
If you’re having trouble collecting on your invoices, it could be that you’re not paying close enough attention to customers. If your clients are experiencing financial difficulties, for example, their money problems will take center stage in their minds. The problem isn’t that they don’t have money; it’s that they can’t afford to pay you. In short: Other people’s problems tend to be bigger than our own.
9) Stubbornness
One of most common excuses is related to finances, more specifically: I can’t afford it. Yes, it may be true that you don’t have enough money in your bank account right now, but if you utilize expense management software to track your daily and monthly expenses, you will know exactly where and how to cut back on spending.
10) Perfectionism
Inability to meet your self-imposed deadlines is a classic trait of perfectionism. We’re all guilty of occasionally letting deadlines slip or procrastinating on projects, but if you’re always late because you can’t bring yourself to put in the last burst of effort needed to complete something, it might be time to address your issues with perfectionism.
SOURCE: Top 10 Most Typical Late Payment Excuses and How to Overcome Them?
