Are you a creditor who is consistently struggling with unpaid debts and debtors making excuses for not paying their debt and looking for tips on how to manage it?
If so, you may be experiencing some hardship in your business and some personal stress and anxiety as a result of these unpaying clients.
Effectively recovering debts is a really important part of being a creditor, of course, but sometimes it isn’t as simple as it may seem.
However, consistently failing to collect payments from clients can result in some serious issues in your business, so you must act quickly to deal with these clients.
One particular element of managing clients who don’t seem to want to make payments is managing and appropriately responding to excuses or reasons that they can’t or won't pay.
As a creditor, chances are that you’ve heard every excuse in the book, but that doesn’t mean that it is easy to continue to respond and deal with these excuses.
So how can I appropriately deal with my debtor's excuses for not paying their debts?
In this article our Aussie debt collection team will discuss some basic tips that you can use to combat common debtor excuses and how you can use them to deal with unpaying clients while remaining polite and professional!
Unpaid Debts because of Financial Hardship
One excuse for not paying a debt that we are sure you have heard a lot is that the debtor is experiencing financial hardship and cannot afford to make payments.
Everyone experiences periods of financial difficulty in their lives. It can be difficult to manage the expenses of everyday life while also trying to get back on track with your finances.
However, your priority as a creditor is ensuring that your business and you are being paid adequately and that the financial struggle of debtors isn’t causing financial struggles of your own, especially if the debtor is exaggerating their financial hardships!
So, a debtor approaches you and says that they cannot pay due to money struggles; what do you say?
Try to express some empathy for their situation and, if it is viable for you, consider arranging an alternative payment plan that may be more manageable for your debtor.
Ensure that you make it clear that non-payment is not an option, however.
Disputing Charges on the Invoice
Another common excuse that you may hear from debtors who are not paying off their debts is them disputing charges on the invoice.
As a creditor, it is important that you spend a lot of time on your invoices and ensuring they are correct. After all, it is better to do something right the first time than having to fix your mistakes later, right?
This being said, sometimes mistakes happen, and charges are incorrectly added.
However, sometimes debtors will take advantage of this possibility, even if no mistake has been made, and dispute charges that are, indeed, correct.
So how can you respond to clients who dispute charges as an excuse to avoid paying their debts?
You should double and triple-check that the invoice is correct, and that all charges are valid.
Once you are sure, contact the debtor and explain the disputed charge and insist on payment for it or consequences will ensue.
Unpaid Debts because of Delaying Contact
Another common excuse that you may hear from debtors who are not paying off their debts is them telling you that they will contact you later as they are busy, but never do.
Debtors have busy schedules, just like you! Generally, as their creditor, you will have at least a small notion of their work schedule and general things that keep them busy throughout the day.
However, sometimes when you call to discuss payment of the debt at a time that you anticipate will work for them, they cannot talk and say they will call you back later.
This is ok; provided they do indeed call you and do not do this every time you call, no matter what time or day it is!
This can be a common excuse used to avoid payment, so how do you deal with clients that you can never seem to reach at the right time?
It is wise to accept this excuse only once or twice in a row, but simply ask them for a specific time that they will call you back or insist that it is urgent, and the conversation must happen now.
If they do not reply, consider paying a visit to their residence, ensuring you are following guidelines, of course.
Dissatisfaction with your Business
Another common excuse that you may hear from debtors who are not paying off their debts is that they are dissatisfied with the product or service you provided.
Every business has to deal with unsatisfied customers from time to time. Whether they dislike the service or product received or some other element of your company, complaints are serious matters in business that should be addressed.
However, when a customer agrees to make debt payments, and then neglects to do so due to these (sometimes fabricated) complaints, this can create a serious issue.
If this happens to you, ensure you sit down with the customer take their complaints seriously and ensure that your business acted as agreed upon.
If there is any validity to the complaint, consider offering a slightly discounted price as appropriate.
However, if you find that there is not, insist that full payment must be made as agreed upon.
Unpaid Debts because of Banking Issues
Another common excuse that you may hear from debtors who are not paying off their debts is that there is an issue with the bank and their payment won’t process or go through.
Banks mess up sometimes, as you have likely experienced, and sometimes payments can experience some hold-ups due to issues with the debtor’s banking.
If your debtor has informed you of a banking issue, verify this information and offer some alternative payment methods that can be used. If this is not viable, encourage your debtor to take up the issue as soon as possible, or issues with the debt will ensue.
Unpaid Debts because of Loss of Job
Another common excuse that you may hear from debtors who are not paying off their debts is they have lost their job and can’t afford to pay their debts. Losing a job at a bad time can be awful.
Sometimes debtors are fired or removed from their jobs for one reason or another and cannot afford to pay their debt due to them no longer having any form of consistent income.
If this is the case for a debtor of yours, consider empathising with their situation and offering temporary relief or a modified payment plan for a short period.
This way, they can find a new job and get back on track with payments without the need for insolvency or bankruptcy.
Unpaid Debts because of Family Emergency
Another common excuse that you may hear from debtors who are not paying off their debts is that they have had a family emergency and cannot make payments.
Similar to the last point, sometimes unforeseen circumstances such as family emergencies can cause debtors to not have the time or money to consider payments.
If this is the case for a debtor of yours, express your empathy with their situation and consider, only if it is viable for your business, an adjusted payment plan so that they can get back on track and continue with payments.
Unpaid Debts because of Forgetfulness
Another common excuse that you may hear from debtors who are not paying off their debts is they simply keep forgetting to pay.
Everyone forgets about their responsibilities sometimes.
However, if a debtor consistently forgets to make payments due to their forgetfulness, this can become a serious issue.
Consistent reminders, which you can automate, may be an effective solution to this problem.
Alternatively, having a serious conversation about the necessity of debt payments and how forgetfulness will not work as an excuse may be the better route for you.
Debtor Fleeing the Debt
Another common excuse that you may hear from debtors who are not paying off their debts is simply changing key details about themselves and leaving their known residence to avoid the debt.
This can be a serious problem for your business. If a debtor has seemingly disappeared, due to a change of address, name, workplace, and other information that you would use to contact and locate them, you may have to take some serious action to find them and have the debt paid.
Skip tracing is a process that can be effective in resolving exactly this problem.
Skip tracing is the process of using any information about a missing debtor to search through records and databases to locate them!
This can be a very effective tool, so try it today!
Unpaid Debts - Key Takeaways
Dealing with debtors that don’t want to pay can be difficult.
This is why it can always help to have some tools that you can use to deal with their excuses and responses to demands for payment. If you find that you are still struggling with this problem, it may be time for you to hire external help, such as a debt collector, to assist with this issue.
Debtor Excuses for Unpaid Debts FAQ
Welcome to our FAQ section, where we provide insightful answers to common questions about managing unpaid debts.
Whether you're a creditor dealing with challenging scenarios or simply seeking to understand the nuances of debt collection, this section covers a range of topics.
From addressing debtor excuses to maintaining professionalism in difficult situations, our answers are designed to guide you through the complexities of debt recovery.
What is a common excuse for not paying a debt?
A common excuse for not paying a debt is experiencing financial hardship. Debtors often claim they cannot afford payments, which may require creditors to offer alternative payment plans while ensuring non-payment is not an option.
How should a creditor respond to disputes over invoice charges?
When facing disputes over invoice charges, creditors should verify the accuracy of the invoice. After confirming all charges are valid, they should explain this to the debtor and insist on payment, highlighting the consequences of non-payment.
What can be done about debtors delaying contact?
To address debtors delaying contact, creditors should initially accept this excuse only once or twice. They should then ask for a specific callback time or insist on an immediate conversation, and consider a personal visit if non-responsive.
How should dissatisfaction with a business's service or product be handled?
Dissatisfaction with a service or product should be addressed by reviewing the complaint and the business's actions. If valid, a discounted price might be offered; otherwise, full payment should be insisted upon as agreed.
What if a debtor claims banking issues are preventing payment?
If a debtor claims banking issues are preventing payment, creditors should verify this information. Offering alternative payment methods or urging the debtor to resolve banking issues promptly is recommended.
How to deal with a debtor who has lost their job?
Dealing with a debtor who has lost their job involves empathising with their situation and offering temporary relief or a modified payment plan. This allows them time to secure new employment and resume regular payments.
What should be done if a debtor cites a family emergency as a reason for non-payment?
If a debtor cites a family emergency as a reason for non-payment, creditors should express empathy and consider an adjusted payment plan. This helps the debtor get back on track while showing understanding of their situation.
How to handle debtors who forget to make payments?
To handle debtors who forget to make payments, creditors should set up consistent reminders, possibly automated. A serious discussion about the necessity and obligations of debt payments may also be required.
What can be done about debtors fleeing to avoid debts?
For debtors fleeing to avoid debts, creditors may need to employ skip tracing. This process involves using available information to locate the debtor and ensure that they fulfill their payment obligations.
Is it advisable for creditors to hire external help for debt collection?
It is advisable for creditors to hire external help, like debt collectors, if they struggle with persistent unpaid debts. Professional collectors can provide specialised assistance in dealing with challenging debt recovery situations.
Can empathy be effective in debt collection?
Yes, empathy can be effective in debt collection. Understanding a debtor's situation and offering flexible solutions can lead to more cooperative and successful debt recovery.
How important is it to maintain professionalism in debt collection?
Maintaining professionalism in debt collection is crucial. It helps in building respect, trust, and a willingness to cooperate, which are key to resolving unpaid debts.
Should a creditor offer alternative payment plans to debtors in financial hardship?
Offering alternative payment plans to debtors in financial hardship is often beneficial. It demonstrates understanding while ensuring that some form of payment is still being made.
How should a creditor approach a debtor who consistently delays communication?
A creditor should approach a debtor who consistently delays communication by setting clear expectations for a callback. If this fails, more direct measures, like a personal visit, may be necessary.
What approach should be taken if a debtor disputes the validity of charges?
If a debtor disputes the validity of charges, the creditor should thoroughly review and confirm the invoice's accuracy. Clear communication about the validity of the charges and insistence on payment is essential.
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.