There are any number of reasons why your invoice hasn’t been paid yet, and the truth about why your invoice isn’t paid on time can sometimes be incredibly frustrating. The goal of this post is to share these most common reasons so that you can better anticipate - and avoid late payment of invoices.
A lot of people are looking for guidance on how to chase an overdue invoice or how to write an overdue invoice email - the truth is, before you get to this point you need to first identify what has gone wrong. This is why we have pulled together the list of the ten most common reasons your invoices are paid late. This is your starting point to get a better understanding of what might be happening in the background to slow down your invoice payment.
Your client hasn’t sent your invoice on for payment
This is quite a depressing thought but is incredibly common. Your client could have been really busy and forgot to send it, but it could also be because they are disorganised or complacent. The lesson to be learned here: Do not assume that your client is as organised as you are - also crossing your fingers does not work.
Your client is awaiting approval
Approvals are a huge part of the invoice payment process for many companies, and the result is that your payment can be held up because of a single person’s approval queue. If you keep this in mind when you are submitting the invoice, you can help your client by providing all of the information which will help them approve quickly.
Your client’s finance team deliberately doesn’t pay until they are chased
Believe it or not, this is a common but flawed approach that businesses use to attempt to improve their own cash flow. In fact in some companies the accounts team are specifically instructed to put off paying as long as possible, sometimes even not processing at all until they have been chased for payment. They specifically are banking on the fact that their suppliers will put off chasing invoices and so they don’t have to pay for even longer. This is one of the many reasons that you can’t make assumptions about where your invoice is at in the process!
Your invoice is stuck in the system or process
With many companies, the extensive processes and systems can leave opportunities for your invoice to get “stuck”. When there are various people involved, it only takes one oversight or system error for your invoice to be missed and not passed on, approved, or submitted for it to be stuck. It’s all too common for this to happen, and your client often won’t realise until you contact them and they look into it specifically. This is another example of how assuming everything is under control can be counterproductive.
Your client can’t find your invoice
It’s incredibly common for your client to be busy or unable to submit your invoice for payment as soon as they receive it - but when they eventually remember and search for it, they can’t find it. They could have accidentally deleted your invoice, or simply can’t locate it - in this scenario it’s unlikely they will reach out to you to ask for it again. They will be counting on you to resend it at some point, so unless you are a mind reader you will need to consider this in your processes.
Your client has payment terms you aren’t aware of
It’s very common that many businesses have fixed payment terms, which means they never pay before a certain time frame - this is usually around 30 days however can sometimes be up to 120 days. This means that sometimes your invoice isn’t actually paid late, you just are working to a different payment term timeline than your client. This is why it is so important to work on this kind of thing upfront to ensure that you are aware.
You are not set up as a supplier
This is something that is increasingly common. Many companies have extensive processes in place in order to setup a supplier (you). Unfortunately, paying someone often isn’t as straight forward as entering your bank details and pressing “pay”. These processes are annoying, but they are in place for good reasons, including prevention of fraud and money laundering, and also increasing security for you and your payments. So to get set up, you often need to fill in various forms, and wait for these to be processed. This is understandable and OK, the problem is that usually your client contact will forget to tell you this upfront. This means that many people end up only finding out that this is the problem until weeks or even months after the invoice is already overdue.
There is information missing from your invoice
Your client will need certain information included on your invoice in order to help them process it for payment. This could be a reference number such as a purchase order number, a certain code, or reference name that helps them identify what your invoice relates to. This information helps them identify who is responsible for the cost, approval, or processing and without this information can leave your invoice unpaid.
You sent it to the wrong person
This might seem a little obvious, but it really can be quite misleading. Each company is different, and in many cases the person who you work with doesn’t have anything to do with getting invoices paid. In fact, in many cases they won’t have a clue what to do with a submitted invoice. This might seem crazy, but it’s true! Sometimes your client’s process might be to submit to the accounts department, other times a new staff member might be unaware of their responsibilities in the invoice payment process. Assuming that the contact you have for work is also the best contact for processing invoices can often be a huge mistake.
No news is good news - WRONG!
This is a common assumption, but it is usually the complete opposite, because if you haven’t heard anything about your invoice payment, it’s probably because nothing is happening with it. It can even be completely neglected in the depths of someone’s inbox or approval queue, with no signs of resurfacing until someone realises it has been missed.
If any (or all) of the above reasons are familiar to you, there is good news: with the right steps, all of these issues are preventable with just a few tweaks to your routine and processes. The good news is that once you are aware of these reasons for non payment, you are already on track to being able to avoid it in the future. But before you go further, you need to first answer this: Do you know how much your current strategy is costing you? If you don’t know yet, we have created a calculator to help you find out here.
If you’re ready to save time and money by putting into place a simple solution to help you avoid late payment of invoices, and stop the never ending cycle of chasing invoices, then
Do you have any other reasons to share that your invoice isn’t paid? Share below!