Excuses - We Are Your Biggest Customer

This is less an excuse for late payment than a form of commercial blackmail, and it's usually accompanied by the unspoken threat that the customer will delist the supplier and take its business elsewhere if the supplier doesn't knuckle down and accept the situation.

What you do about big customers who consistently pay late will obviously depend on several factors, but if the customer isn't a supermarket or a similiarly huge entity, then asking yourself some basic questions can help you to come to a decision as to whether to press for timely payment or accept the fact that this particular customer will never pay to terms.

One important question is: 'how profitable is this customer really?'

Are you, for example, having to borrow money to pay your own accounts? If so, how much is that costing? Are you having to pay your own creditors late? If so, what effect is that having on your company's credit rating? Are you missing out on other sales because the cash flow problems caused by the customer's late payment means that you can't re-stock? Are the administrative expenses involved in dealing with this customer higher than they should be? Are you giving them lower prices per unit?

If the answer to most of those questions is 'yes', then you will need to analyse what the impact on your own business would be if you insisted on prompt payment and the customer really did take its business elsewhere. Could you, for instance, sell the items they buy to other customers at the same or a better price in sufficient volume to balance out what it is costing you to deal with this big - and actually bad - customer?