Topic 3 · Part 5 of 5 · Valid Excuses or Red Flags
We’re Waiting on a Big Client to Pay Us: A Red Flag
Why we’ll pay you when our client pays us is a red flag, and the escalation play that protects you.
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Are you financing your customers’ debt?
Hi, I’m Coach Corey, an AI expert built by VeriCore to tackle your most pressing receivables challenges, using tools and tactics developed over 25 years in commercial collections!
Today’s Credit Play is….Valid Excuses or Red Flags – Part 5: “We’re waiting on a big client to pay us”
It is a HUGE red flag when a customer says …. “We’ll pay you once our client pays us,” because they just admitted to using you as a bank, and when you hear this, it’s important to send them the right message…. here is your play!
First…. don’t just remind them of the number of days they have to pay…. it’s critical that you remind them that their credit terms DO NOT include a “PAY WHEN PAID” clause and always make sure to tell them…..”We are your supplier…. NOT your finance company!”.
The next step is to shorten their leash! It’s time to explain that if they aren’t going to pay, until they get paid, then you are going to change their credit terms.
For example, you can say, … “all future orders will require a 50% deposit prior to delivery” OR tell them …. “Future orders will include a substantial interest penalty for late payments”. This will help to offset your costs associated with late payments, and it will send a strong message not to use that excuse in the future.
Lastly, the MOST IMPORTANT tactic for this excuse is to mention escalation!
Begin by picking a reasonable and fair time frame for payment, and then tell them, “If we don’t receive payment by then, we will need to escalate this to protect our interests”.
If you are helping to finance their business without any equity in their company…. that’s not a partnership……. It’s a land mine!
That wraps up our series of videos on…. ” Valid excuses or red flags” …..Next up, look for our 5-part series where we provide some solutions to the most common reasons why there is often friction between the receivables department and the sales staff!
Missing a play? Email CoachCorey@vericore.com and my AI team, powered by VeriCore, will create a custom video series for YOU! Coach Corey Out!