Is there a way to tell if my customer is not going to pay my business?

We speak to business owners and other decision-makers all the time when it comes to debt collections and there is one question they ask repeatedly.

Are there any warning signs a customer is not going to pay?

And the answer is a definitive yes!

There are unquestionably signs that a customer is not going to pay and we have assembled these below. And while that is not always the case, our experts have found these are the more apparent signs of a customer not paying you in the future. You may have customers that are just disorganized at home which includes paying their bills but it’s important to keep an eye out for these warning signs.

If your business is experiencing any of these warning signs of late paying customers, you’ll want to pay attention because it may require sending these accounts to a reputable debt collection agency.

 

Persistent delays in payments

One of the clear warning signs that a customer is going to become delinquent is when previous payments to your business are consistently delayed. Despite due dates, payment reminders and statements, you fail to get paid on time. While this could mean that your customer is just disorganized, it can also indicate that your customer is having financial difficulties.

No response and lack of communication

Another way you can predict the future of a non-paying customer is their lack of response to payment issues. Despite your repeated attempts to get that customer to pay, there is no communication or response. This is another sign that you will either eventually end up in a dispute about service or price or that the customer is having trouble paying their bills.

Frequent complaints or disputes

If your customer is always complaining about the service they have obtained from you or pricing, you may eventually see that customer become delinquent. And if they are always disputing your bill or charges and fees for services, it’s a good indicator that they are eventually not going to pay in the future.

Promises to pay never come through

You may be successful in getting your customer on the phone and they may even tell you they will pay you. But then payment never shows up. As the old saying goes, “check is in the mail…” but it doesn’t happen and this is another warning sign that you may need to get more assertive in your collection activity with this customer. If a customer repeatedly makes promises to pay and then does not, you may end up having to enter their account with your collection agency.

Past history of late payments

You may have customers that just pay late all the time. We all have those types of customers who never pay on the due date. But this can indicate a future problem. Your customer may be experiencing financial difficulties and it could only be a matter of time before those late payments turn into non-payments. If your customer is unreliable when it comes to paying on time, this could be a red flag for the future.

How can a business minimize the potential for payment delinquencies?

There are several ways that you can not only get customers to pay on time, but keep up with those that lag behind.

And it comes down to a simple theme. Systems and processes.

Your business no matter the size needs to have a system for processing payments from the moment you obtain a new customer. And you need a process for handling payment delinquencies.

• Set payment expectations right up front with your customer.
• Utilize contracts or simple agreements.
• Invoice on time and at regular intervals.
• Ask for down payment or partial payments.
• Have the capability to accept all types of payments.
• Follow up by phone or paper statement when payment is not received on time.
• Indicate to a customer that payment has not been received and further collection activity is possible.
• Send delinquent accounts to a reputable collection agency at regular intervals such as 60 days.
• Always be kind and resolve disputes diplomatically with your customer.
• Make sure your team understands the importance of following all accounts receivables procedures.