Five Clues Your Customer Is Not Going to Pay You

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. There are, in fact, red flags that can help you identify when a customer is having financial problems or is just not going to pay you on time.

• No communication - once the communication between your company and your customer is broken down that is a red flag #1 that your customer can't or won't pay. Keep the lines of communication open at all times in order to avoid this.
• 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.
• Broken payment promises with no real reason other than I forgot, was on vacation or I thought I mailed that. That's red flag #3. Keep an eye on this type of account - and check out the customers' social media pages. If they can afford to take a vacation, they can pay your bill or at least set up a payment plan.
• They paid for their last order that was on payment hold with a bad check in order to get another order shipped. This is red flag #4. Any account that writes a bad check needs to be re-evaluated. Re-check credit, get cash for the bad check and any fees, and revoke their credit immediately. Also, make sure to ask for pre-payment or cash on delivery for any future orders.
• Finally, red flag #5 is 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.

Some bad debt is preventable. Do all you can to prevent as much of it as you can. Learn more in the book, The Guide to Getting Paid, written by Michelle Dunn. Weed out bad paying customers, collect on past due balances, and avoid bad debt.