When reviewing your account receivables there are certain “Red Flags” that may indicate a problem. There is a problem when customers:
- Avoid Contact
- Do Not Return Calls or Messages
- Dispute Invoices
- Passed Bad Checks
- Use Your Competition
- Threaten Bankruptcy
- Ask for a Payment Plan and Skip Payments
- Making Partial Payments
- Are Rumored in the Industry to have Financial Problems
- Claim They Cannot Pay You Until They Get Paid by Their Customer
Finally, the most disturbing sign is when your competitors begin to call you for credit references, indicating that your customer is no longer buying from you. Ignore these flags and you are in jeopardy of writing the account off to bad debt. The sooner you take action the better.
