Analysing a slow payer is easy. Each debtor is going to fall into one of the following 4 categories.

  • Memory loss
  • Cash flow difficulties
  • Dissatisfaction
  • Poor Ethics

All you need do is ask the question ‘I note your account hasn’t been paid. Why is that?’

Reason 1: Memory Difficulty

The response is along the lines – ‘sorry I forgot’. Whilst we can imagine this happening as it does to most people at some time or another you need to ask ‘so when can I expect payment?’ Either you will be paid as promised or you won’t. If you do then the situation is contained for now. If you don’t then your debtor has ethical difficulties.

Memory difficulty can also be when YOU have forgotten to use a correct order or job number on your invoice. Approval for payment may then be delayed.

Reason 2: Cash Flow Difficulty

The typical response here is ‘sorry, things are really tight at the moment’. Whilst most of us can relate to this one your debtor had an obligation to discuss this issue with you before their account became overdue. You are therefore entitled to negotiate a payment plan. For example you could say ‘sorry to hear that but unfortunately this doesn’t help me pay my bills. How about you pay half now and half next month?’ Drive your debtor into making a commitment. Confirm it in writing via email.  Always expect a reasonable payment immediately. Either you will receive payments as promised or you won’t. If you do then the situation is contained. If you don’t, then your debtor has ethical difficulties.

Reason 3: Dissatisfaction

The response is along the lines ‘sorry but I wasn’t happy with the job you did’. Like having a cash flow difficulty your debtor had an obligation to discuss this issue with you before their account became overdue. However, what you need to do here is to fix the problem that your debtor has. They then have no excuse for not paying. Once you have fixed the problem you will either receive payment as promised or not. If you do then the situation is contained for now. If you don’t then your debtor has ethical difficulties.

Reason 4: Poor Ethics

The signs your debtor is having ethical difficulties is when they don’t respond to your calls or letters or because they have not kept one of the arrangements made above. Clearly your debtor has an ethical difficulty in making payment. This spells danger to your cash flow. Call in a specialist to help.