A: Five Clues That Your Customer Is Not Going To Pay You
Most business people don't recognize the moment that an account they are selling to goes bad. Frankly, most business people don't know what to look for, even when the clues are right there, staring them in the face. The following list isn't meant to be the only red flags to watch for, just some of the most common ones:
1. Suddenly, no communication from your customer. After having
had a wonderful business and personal relationship for a long
time, with the customer regularly paying you find the customer
suddenly stops returning telephone calls and/or de-friends you
2. The new dispute on old invoices. When you approach your
customer on the overdue invoice(s), the customer now has
quality issues with the product sold, the price charged and/or
makes new claims of shortages. If there has been no claim of any
of those made by the customer within a reasonable time after
delivery, what does that indicate? The answer is; an
unwillingness or inability to pay.
3. Broken promises of payment. Often the creditor will approach
the customer to discuss the issues of non-payment. One of the
ways the customer can further extend terms is to promise
payment "next week", "after a receivable clears" or a "payment to
coincide with the next shipment." Broken promises can also take
the form of "I forgot to mail that" or "my Accounts Payable
person is/was on vacation". A wary businessman will look at
these empty promises of payment as nothing more than smoke
screen to mask a cash crunch at the customer's place of business.
4. The C.O.D. check has been dishonored. Despite a Credit Hold
because of non-payment of older invoices, the Credit
Department might make the business decision to continue to
sell to the delinquent customer. Arguably the parties need each
other, badly. In an effort to get a large client back on its feet with
the prospect of future profit, the creditor might agree to new
sales, but only on a C.O.D. basis. If that C.O.D. check bounces,
that should be the last business the parties do, ever.
5. The phone is disconnected and mail is returned. Although this
might seem more like common sense than a clue, even if you are
unable to establish any form of contact with the delinquent
customer, it might not be too late to collect from them.
Businesses might close but they don't disappear that easily.
Don't walk away from bad debt, try to collect on it. Sue in Small
Claims Court if you don't want to engage a professional to
collect the debt for you. You never know what might happen if
you take affirmative action.