If you’re lucky, your customers will pay all of your invoices on time, every time. But sometimes, even despite your best efforts, one or more of them won’t pay promptly. So, here’s some information to help you out if one of your business customers suddenly becomes a late or, worse, a bad payer.
Late Payer VS Bad Payer – There’s a difference:
- Late payer – A customer who hasn’t paid their invoice on time but hasn’t given you strong reason to believe they won’t pay at all
- Bad payer – A customer who doesn’t pay their invoice at all, resulting in their debt being written off at a cost to your company
How to Find A Bad Payer
Do Some Research
If you are not confident about their legitimacy, then you can check up on a few things to get a better idea of who they are. Make sure if the company is registered and permitted to trade, check for their debt history with a credit check from an agency such as MarisIT or search for their company name under the ‘News’ tab in Google to read up on any headlines that mention them in relation to debt or trading difficulties.
Their website may say that they are the best in the business, but their customers and suppliers may tell a different story. But one thing is for sure: customers are usually unbiased and will tell you a story you can trust. Search for online reviews of the company or get in touch with other companies that you know have dealt with them before.
If the get the all clear from all of the sources you check, you may still want to put some precautions in place with new customers. Here are a few ideas:
- Limit the amount of debt potentially available to them by making your credit limits low, staging payments or taking a deposit before you start work
- Insure your accounts receivable (money that you’re entitled to receive due to supplying goods or services) with business credit insurance
- State your terms and conditions clearly in a contract that is signed by the both of you.