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Securing new clients is an essential part of increasing your business’s cash flow and achieving sustainable growth. But as you enter these relationships, you may find that not all customers are as reliable as others—especially when it comes to making payments on time or at all. That’s why your accounts receivable team should monitor payment behavior to determine if it’s time to pursue debt collection. To help you preserve your revenue stream, here are five early warning signs that a client isn’t going to pay as expected.

5 Clues a Client Won’t Pay on Time

1. Constant Cash Flow Complications  

From slow quarters to rising production costs, there are many reasons why a business may experience the occasional hiccup with cash flow. But if your clients are constantly providing excuses as to why they can’t make payments on time, they may be headed toward financial problems that result in non-payment and debt collection efforts.

2. Poor Communication

If your calls and emails get no response from the customer, they could be ignoring your requests in an attempt to dodge payment. Talking to a different person every time you call may also indicate that the company’s accounting department isn’t organized enough to comply with your payment standards.

3. Attempt to Change Terms

debt collectionEven when they’re bound to a contract, customers may sometimes try to adjust the terms to reduce their liability—such as by trying to renegotiate for a lower rate or request additional services for the same cost. This change in direction is often a sign that the client is trying to get ahead of financial issues that could result in unpaid invoices.  

4. Calls From Other Vendors

While it’s normal to get occasional calls for references, you should be wary of a sudden increase in these requests—especially if they’re coming from your competitors. The surge of reference requests can be a sign that the client knows they can’t sustain a relationship with you and are seeking support from another source.

5. Large First-Time Orders

Always be cautious of new clients that place unusually large orders the first time around. This practice is often used by those who already know they won’t be able to pay in an attempt to defraud your company. To prevent these problems, secure payment information ahead of time and run a credit check on the client to assess their financial responsibility.

 

Dealing with non-paying clients is an unfortunate part of most business operations, but it’s not something you have to manage on your own. By outsourcing your accounts receivable management to Joseph, Mann & Creed, you’ll have support from trained professionals who know how to prevent and address non-payment concerns. And when clients can’t satisfy their past-due balances, this commercial collection agency can assist with every step of the debt collection process to help prevent losses. Visit the agency online or on LinkedIn to learn more about their capabilities or call (216) 831-5626 to speak with an associate at their Twinsburg, OH, headquarters.  

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