There isn’t a business out there that is immune to slow payers or non-paying customers, but what can you do to prevent this from happening? Keeping an eye on your customers’ accounts is an important part of preventing bad debt or payment problems. I would like to share some “red flags” with you that can help you identify when a customer is having financial problems or is just not going to pay you or pay you on time:
1. No communication – once the communication between your company and your customer is broken down that is a red flag that your customer can’t or won’t pay. Keep the lines of communication open at all times in order to avoid this.
2. Waiting until an account is already past terms to bring up disputes such as pricing problems, shortages, or billing issues. It is up to you to “babysit” your customers’ accounts to make sure they stay on track – contact customers before the invoice is due to resolve any issues so the bill can still be paid on time.
3. Broken payment promises with no real reason other than I forgot, was on vacation or I thought I mailed that! Keep an eye on this type of account – and check out the customers’ social media pages – if they can go on vacation – they can pay your bill or at the very least set up a payment plan.
4. They paid for their last order that was on payment hold with a bad check in order to get another order shipped. Any account that gives you a bad check needs to be re-evaluated. Re-check credit, get cash for the bad check and any fees and revoke their credit, make sure to get pre-payment or COD, cash only for any future orders.
5. The mail is returned and the phone is disconnected. Check the original credit application and/or contract for additional contact information; check their social networking pages for new cell phone numbers or addresses. If you are unable to re-establish contact, place them with a collection agency or take them to small claims court yourself if the amount due allows.
An internationally-known expert on the topic of credit and collections Michelle Dunn is a leading authority on collecting money to businesses everywhere. Michelle is an award winning author and self syndicated columnist as well as a professor at Plymouth State University teaching credit and collections business courses. She has worked in the industry for over 24 years and has been named one of the Top 5 Women in Collections for two years as well as being voted as one of the Top 50 most influential collection professionals in her industry. Learn more at www.MichelleDunn.com and www.Credit-and-Collections.com.