Why Customers Delay Payments-Insights for Small Business Owners

If you operate any type of business, you’ll have people who do not pay you.

Late and non-paying consumers are not exclusive to any size business, either. Large organizations and small businesses struggle to get customers to pay sometimes. That’s part of being in business.

However, not every reason for non-payment is the same. Many consumers have legitimate reasons for not paying their bills and struggle to meet their own financial obligations.

And at the same time, you may have consumers that can pay but won’t.

Let’s take a look at some of the legitimate reasons people are not paying you, and some not so reasonable reasons why you haven’t received payment.

Legitimate reasons you have not been paid yet

One of the most common reasons consumers have not paid your business yet is their negative cash flow. There are many reasons for that, including mismanagement of money, a change in employment status, or overextension. They may also be small business owners, and their financial situation has changed.

Billing errors

Many consumers hesitate to pay a bill if they feel there is an error on the invoice. That could be for the services provided or a dispute on the price quoted.

Quality of service

If a consumer feels they have not been provided with what your business agreed to, many will resort to holding back payment. For many businesses this puts you in an awkward position. That’s why it’s mission-critical to ensure the consumer understands exactly what you will be providing and what they will be paying for. Clarity matters!

Payment methods fail

Often, a consumer’s credit card is declined, or the bank flags a large amount as fraud. Sometimes, this can be resolved with a simple phone call.

Miscommunication on payment terms

You may be waiting for payment if you don’t clearly state the payment terms on contracts and invoices. This is why it is one of the mission-critical parts of accounts receivables you must address promptly. Maybe the consumer thought they had more time?

Illness and family emergencies

If for some reason your client fell ill or ended up in the hospital for example, they may not be able to pay you. If your client was injured and then needed to go to a rehabilitation facility for physical therapy, you might not hear from that client for weeks.

Other less valid reasons for not receiving payment

As a collection agency serving small businesses and large organizations, we always like to provide a consumer with the chance to tell their story. Many times, they need assistance in navigating a challenging financial situation. However, that’s not always the case and some customers just don’t pay their bills.

Procrastination

Guess what? Some people do not like paying bills and they will put it off for as long as they possibly can. Procrastination is an emotional response to something an individual feels is a negative. No one loves to pay their bills but some procrastinate far too long.

Prioritizing other bills and debt

If a consumer is in over their head and is accumulating debt, that will delay any payment to your business. Even if your bill is severely overdue, a consumer may choose to pay something else. That’s why it’s important to follow up early and use a reputable debt collection agency.

Testing the waters on paying you late

We feel most consumers want to meet their obligations but there are individuals out there that will test your business. They do that by seeing how long they can go without paying you because there is also a lack of accountability or consequences. Once again, This is why your accounts receivable program needs to be rock solid.

Disorganized record keeping

Take for example the person that goes to the mailbox and just throws their bills in a pile. Many people who are disorganized have challenges meeting their financial obligations. This is another reason scheduled follow-ups for consumers who have not paid is a must have in your business.

Bad faith

Yes, there are people out there who order a service with the intention of not paying. This is a very small percentage of the consumers you will deal with, but it can happen and does for many businesses.

These different reasons for not getting paid tell you that it’s essential to listen to the consumer first to understand why your bill has not been paid. Listening is a critical part of getting your late invoice paid and resolved.