There are multiple red flags you can look for is your customer might be in financial difficulties, below are a few tips on what to look for: –
1.Excuses and broken promises
How many chances are you happy to give your customer? When they don’t pay as promised or make excuses you know they are going to struggle.
2. Not returning your calls
If they’re not returning your calls, even though you have left multiple messages, it is a definate sign they are avoiding you and unable to pay.
3. Keep your eye on their payment patterns
Look for changes to your regular customers payment patterns. If they start to change significantly you might question their cash flow and consider reducing any credit limits.
4. Service complaints
Complaints can happen at any time during the transaction. New objections can be raised to delay or get out of payment.
5. Not buying from you so much
If a customer is reducing what they buy from you when they have previously had a good steady pattern, this could be a sign they are in financial difficulty.
6. Wants to pay by cheque
This is a very simple way to stall paying. They take longer to clear and the cheque could bounce. Do not supply them with any further services or products until the cheque has cleared. It is always better to take a cheque than nothing!
7. Returned post
Never a good sign!
8. Ask for longer to pay
Continual request for more time to pay is a definate sign they are in trouble. The occasional request for a payment extension is probably not a serious concern, but if the client continually asks for an extension then you’ll know that something’s not right.
10. Gut feeling
Always go with your gut feeling. If you even have an inkling someone is having financial difficulty and you still want to provide them your services, only give them with what you are potentially happy to lose!
If you’re still not sure about a customer, then please call or pop us an email at Cortex Accounting as we are always happy to give you advice.