Why don't (some) customers pay their invoices?

We hear this not just daily, but multiple times a day, and it's becoming more and more of an issue for small and medium size businesses (and big business too). So why don't some customers pay their old, outstanding invoices even after the service or product has been delivered?

Lets start by excluding the obvious exclusions...

• The customer has a legitimate dispute regarding the service or product
• The invoice details are incorrect and need to be corrected
• Payment terms have been negotiated and so payment has been made

Ok, so now that is behind us let us try figure out why customers (debtors) aren't paying their accounts and directly affecting your cashflow.

Here are a few points you'll want to consider when addressing late or overdue accounts;

• The customer can't afford to pay and rather than communicating is just ignoring you. In this case it's better to approach the issue with care and compassion as a payment solution can be found as long as communication channels can be kept open. This is a major issue for many consumers and businesses at the moment and you'll need a sound Accounts Receivable process in place to make sure you're in the front of the line when it comes to getting paid.
• You've been inconsistent in chasing the account. Not a judgement but a fact for many SME's who don't have and Accounts Receivable full time role, so the responsibility falls on the owners plate. Inconsistent follow up results in approximately one third of all unpaid invoices and is a simple fix.
• The check isn't in the mail. You don't have alternative payment options that allow debtors to pay via Credit Card or even set up payment plans to pay off accounts. The first option to allow for payments via credit card is a lot simpler than you think and gateways like Stripe, PayPal and Nuvei all offer quick and easy merchant accounts. Link that to an online payment solution and you're able to offer payment alternative.

3 Quick options you can consider

1. Employ someone to help, part time or full time, but give the problem the attention it deserves.
2. Stop offering terms. Weigh up the impact of the total outstanding, unpaid accounts versus what you think you'll lose in possible sales. If feasible, make the change.
3. Automate Accounts Receivable. Now days there are great tools out there to manage and scale your A/R with escalating email reminders, consistent reminders, payment discounts and terms and even managed payment plans and it's all done for you. Check our www.captira.com/carolcollect as an example (yes, it's ours but it's also REALLY good).

If you're interested in finding out more information or just chatting about your A/R challenges drop me an email at justin(at)captira.com or visit us on the link above.

Justin Scott is Chief Growth Officer for Captira Analytical, developers of the Carol Collect SaaS solution that manages and automates Accounts Receivable. Captira takes complex business problems and finds technology solutions for them.