Collecting debts: telltale signs that your customer is not going to pay.

Author:Nitzkin, Gary
Position:Small Business central
 
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The economy has not been good to us the past several years. Your customers are taking longer to pay. How do you know when its time to turn a supplier/customer relationship into a creditor/debtor one? Here are some things to look for when deciding when it's time to actively pursue your customer for a debt:

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"The check is in the mail." or "Send me the invoices again." These are responses that one frequently gets when one inquires about an outstanding invoice. When you hear either of these responses from your customer, it is unlikely that you are going to get paid without professional help.

The last check bounces. This is an excellent indication that professional help is needed to collect your debt, especially when the debtor gives you an excuse such as "the bank screwed up." While this does happen once in a blue moon, it is not likely to be that phase of moon when it happens to you.

The last check is for only a part of what is owed. While your customer may be experiencing cash flow issues, if he only sends you a part of what is owed, your customer may be in trouble. If he had called you before sending you the check to work out a payment plan, you should feel far more comfortable with that sort of a partial payment than one that is unilaterally dictated to you by the customer.

The customer no longer takes your phone calls. Telephone is, by far, the most effective tool for collecting a debt, other than litigation. Nothing puts pressure on a customer to pay than repeated telephone calls and messages. When your messages go unanswered, you know you are going to have a problem collecting.

Your registered letters are returned unclaimed. Another effective technique for collecting money is sending a registered letter. This usually rattles a debtor because there is a stigma associated with sending a registered letter to a debtor. If the customer does not sign for the letter, this is proof positive that you are not going to get paid without professional help.

The customer now has objections to the goods or services delivered. Finally, it usually happens that when you finally get a hold of your debtor to make good on your invoice, he...

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