Be Prepared to Shoot Down Your Customer's Payment Excuses

Overcoming Payment Objections Is Critical to Successful Collections

Once an order has been approved and fulfilled, the primary objective in terms of Accounts Receivable (AR) management is getting paid. Some customers will always pay on time. Others will always pay beyond terms and the remainder will fall somewhere in between. Keeping these latter two groups under control requires collection efforts.

(Photo by Michael Starkie on Unsplash)

At a fundamental level, collections involves contacting customers to collect the money they owe you.  The contacts can be made via mail, courier, email, text or phone call. These days emails and phone calls are the primary methods used to ask for money, but whichever form of communication is used, your objectives and the best techniques for getting the job done remain very similar apart from the mode of communication.

Collections becomes more challenging when the customer objects. Collectors must deal with all sorts of excuses for what is owed not being paid. The best collectors are experts at parrying, or deflecting these excuses and forging ahead with their requests for payment.

Getting Your Message Across Is Crucial

Collecting from delinquent business customers first requires you to get your message through to the person responsible for making payment. When crafting a message, be sure the facts and figures you communicate are accurate and to the point. Keep these three things in mind:

1. Identify ALL the invoices that are outstanding and past due. Don’t just focus on the oldest items or largest items. You want to collect any small partial balances and recently past due invoices as well as the oldeest and largest past due balances.

2. Ensure the customer has received ALL the invoices and other documentation requested, and that there are no unresolved disputes or open deductions.  If there are preexisting disputes or deductions, make sure that all relevant information has been shared and the balance due explained. If you are emailing, or otherwise writing the customer, all relevant documentation should be attached or accessible via a web link.

3. Determine when the customer will pay the outstanding balance, using your persuasive skills to get the customer to pay AS SOON AS POSSIBLE.

Your request for payment may be ignored, in which case you will need to follow up in a timely manner and escalate your demands as appropriate. The intensity of your communications should increase with each subsequent outreach. If a polite request for payment goes unanswered, your next request needs to be tougher. For example, if the AP clerk, won’t help you, talk to the Controller. Keep upping the pressure until you are paid. If you are not making progress on your own, there comes a time when you should escalate the matter to a collection agency or attorney. For more about when to use a collection agency, check out this post: Calling in the AR Cavalry.

Should your request for payment generate a response, it will be one of the following:

• Customer agrees to pay. Ensure you get a payment date from the customer and immediately record the promise and schedule a follow up on your tiickler file or calendar.

• Customer raises a question requiring additional information or documentation.

• Customer makes an excuse or some sort of objection.

When a customer raises a question, it is often a stalling technique. Unfortunately, you have no way of proving that, so you are obligated to provide the information and/or documentation (e.g., copy of invoice, proof of delivery, etc) requested.

To continue reading and learn how best to respond to nine common payment excuses, you must be a paid subscriber . . . please take advantage of our July Sale to lock in a subscription to Your Virtual Credit Manager for just $34.99 annually. . . that’s nearly a 30% discount!

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Please share this newsletter with your small business customers . . . it just might help them collect faster and pay you sooner.