How can small businesses, in particular, secure their cash flow when late payments hit them hard and are at the heart of their difficulties? Discover the arguments you can use to follow up with your debtors.
Your debtors may be tempted not to pay you by the due date because of the exceptional circumstances we are currently facing.
Listening Above All Else
At first, it’s best to listen to them and reassure them that you understand their reaction in this difficult situation. It’s a natural reaction: we shut everything out and protect ourselves until the storm passes…
But this situation is unacceptable: by failing to pay when due, they are contributing to the stagnation of the economy, because one person’s debt is another’s income, and it is this chain that maintains the economy’s balance. We must stand together in solidarity.
The government has led by example by granting deferrals on tax and social security contributions, but it has not asked suppliers to extend payment deadlines. To help businesses in need, it has implemented a range of support measures (See a summary of the available programs in our dedicated article: “How to Optimize Your Cash Flow? ”).
Arguments to Counter Objections
Here are a few points to help you counter the objections raised against you.
If you find yourself thinking, “I can’t pay by the due date,” remember:
- That's just putting off the problem, because you'll have to pay sooner or later.
- If you pay now, the supplier willbe more receptive to your request and may be willing to grant you a payment extension—something they will certainly refuse later if you delay payment.
- By paying now, you maintain a strong relationship of trust with your supplier, you prepare for the future, and you put yourself in a better position to be a priority customer when business picks up again.
- Why haven’t you taken advantage of all the assistance the government is offering businesses to get through this unprecedented period? If they’ve already done so, they’ll be able to pay your invoices. If they haven’t done so yet, they should do so without delay.
If someone tells you they're worried about having to file for bankruptcy, emphasize:
- This concern may be legitimate, but suspending payments now will only hasten the onset of insolvency.
- Government assistance is available to prevent this extreme situation.
If you're told that they can't pay you because the customers themselves aren't paying anymore, be prepared:
- Were the above arguments presented to these recalcitrant debtors?
- Just because customers don’t pay isn’t a good enough reason to not pay your suppliers. Have you followed up with them? Have you done everything necessary to collect those payments? If legal proceedings are initiated, the judges will certainly make sure to verify this.
If there are major clients among those who are not paying, you can report this abnormal situation to your professional organizations —MEDEF, CPME, CCI, the Business Ombudsman, etc. In fact, the government has established a crisis committee to identify the behavior of irresponsible companies. The risk for these “irresponsible” companies is an administrative fine —and the public disclosure of that fine—for failing to meet the maximum payment deadline. It also puts at risk any government aid they may have received.
REMINDER: Article L.441-10 of the Commercial Code stipulates that the maximum payment term is 60 days from the invoice date or 45 days from the end of the month.
Article L.441-3 specifies the exceptions to this rule:
In the event of noncompliance, the administrative fine is €75,000 for an individual and €2 million for a corporation, and the penalty must be published.
If the issues persist, please do not hesitate to contact our debt collection department; our specialists will assist you in obtaining payment of the amounts owed.