When you run a company, you expect clients to pay you on time—especially when those clients are other businesses with established cash flow. However, in many cases, commercial clients won’t close out balances on time and force you to pursue more intensive debt collection efforts. While these circumstances can be frustrating, knowing why a company is past due can help you figure out the best way to resolve the delinquent account. Here are just a few common reasons that businesses face trouble with repaying debts on time.

5 Common Reasons for Delinquent Commercial Accounts

1. Lack of Funds

When a business account is past due, the simplest explanation is that the client simply doesn’t have the funds. For example, if they used your products or services to launch a startup that was never successful, they likely don’t have the cash they expected to use to pay you back. To avoid these situations, run a credit check on new clients to make sure they have a history of financial responsibility.

2. Delayed Cash Flow

Although a business may have fully intended to repay a debt on time, an unexpected delay in cash flow may prevent them from resolving the balance. Whatever the reason, it’s important to communicate early on to find out what their projected repayment timeline looks like—and if they’d be willing to make adjustments to resolve the debt they have with you.

3. Unclear Instructions

The clearer your invoices are, the more likely it will be that you receive payments on time. Specifically, these bills should outline how to submit the payment and when it must be paid. If you skip these details or use vague details—such as “payable upon receipt”—the client may not make repayment a priority.

4. No Established Consequences

If a company is struggling to keep up with finances, they may not be concerned about resolving debts that don’t carry major consequences. For this reason, it’s recommended that all credit agreements involve detailed terms for non-payment—such as late fees, third party debt collection, or discontinuation of services.

5. Dissatisfaction

When companies receive wrong or defective items or didn’t get the support they expected, they may not feel inclined to pay your business for services rendered. To resolve these issues, contact the client to find out if any unresolved issues need to be addressed before they submit payment.

When you don’t want your business to incur losses due to unpaid client debts, trust the experts at Joseph, Mann, & Creed. Specializing in B2B debt collection, this agency understands how to work with all types of businesses to resolve unpaid balances. With their support, this experienced team will secure funds in a way that saves you time and money. For more details on these services, visit this national commercial collection agency online or call the Twinsburg, OH, headquarters at (216) 831-5626. Visit their LinkedIn page to learn more about their legal collection services.