How customers use payment terms and due dates

All is fine when you sign the deal:
- The goods or services
- The delivery date
- The payment terms
- …

Within the requested delay you supply the goods or services and promptly your company issues the invoice and has it send over to the customer by mail or email

Due date
As the due date is nearing you call up your contact and ask if the administration is processing your invoice. Of course your buyer confirms he will call the purchasing or accounting dept. to speed up the process.

When the due date of the invoice has passed by you ask the accountant or the accounts receivable clerk if he has received a payment from your client.
If not paid you call your customer again in the hope to the get them to make the payment. Your client informs you the administration of his company is processing your invoice.

The address is wrong: re-issue the invoice
A few weeks later the invoicing department or you receive a mail or email explaining the invoice was wrongly issued: the address of delivery was correct, but the invoice should be billed to a different address as the company headquarters or Registered Office is located on a different address. They still use the old building instead of the new facility.
How could you know as nobody ever told you.

The only solution is to re-issue the invoice with a different address and hope the customer will pay as soon as possible – but probably the customer will only pay within the agreed delay after receiving the new invoice.
Every few days or week your boss or even the CEO will ask about your unpaid invoice(s) until it becomes embarrassing.

There is nothing that you can do as the customer is king – especially when it comes to paying.
In any case this customer will not play this trick on you again (until he moves his Registered Office).

Managing your invoices, payment terms and payments are key for a successful business.

Cash flow
Using this method the customer doubles the payment terms and improves his cash flow.
The DSO (Days Sales Outstanding) simply doubles and your CFO or accountant gets nervous as his cash flow becomes a problem.

Sounds familiar to you ?