Late Payment of Commercial Debts
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Excuse 15: Payments on wrong invoice

Applicability

Where payments are allocated in order and result in a payment against a different invoice than the customer intended.

Underlying reasons

Customer believes they should pay specific invoices, and has chosen to pay some invoices out of order
This is fair enough, but if paid within terms, paying invoices out of order will not cause a problem even if payments misallocated (think about it).
The only time this is an issue is when at least one of the payments is outside terms - it can result in a different invoice causing a late payment penalty, but a penalty would result anyway
Can happen where an invoice is missed for some reason
Non penalty late payment can happen where the missed invoice is a penalty invoice itself (late payment of which does not cause a new penalty)
Payment mis order can change the number of overdue invoices and so have an impact on penalties due
Customer does not believe they have an obligation to adhere to the agreement they have made
Customer probably has a fundamental misunderstanding that they don't have to do what was agreed, but that it is fair to do whatever they can get away with and feels aggrieved that they failed to get away with paying late when they usually do (with other suppliers).

Resolution

  • Usual answer is to ask what payments go where and manually allocated. Cancel penalty invoices (credit) and re-calculate what penalties are due. This can sometimes mean more penalty than was being chased anyway. However, having allocated as per the customer request, they have no real excuse not to pay the re-calculated invoices.