Late Payments – The Warning Signs
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We’re all on our guard to watch out for late payments, but like a disease, the earlier you spot the symptoms, the sooner you can begin to address the cause.

So what are the early warning signs that a client might be moving towards non-payment? Here are a few of the things to look for – both proactively, and reactively.

Advance Warning

The best thing you can do is to check your clients’ creditworthiness in advance, by obtaining independent credit checks, which should help to flag up any past non-payment of bills, and so on.

In our ‘disease’ analogy above, this is akin to vaccination: you identify the threats before they have the chance to infect your finances, and prevent those clients from being able to run up bills that are greater than they can afford.

Remember, credit checks go beyond simply ‘yes’ or ‘no’ decisions; they can also be used to set credit limits on an individual client basis, so more trustworthy customers can owe you more at any given time, with the confidence that their payment will arrive when it is asked for.

Rapid Response

If you’ve already issued a line of credit to a customer, make sure to manage them carefully, as they effectively represent a chunk of your company finances.

Even if they pay on time, a customer who is getting closer and closer to the deadline can be a worrying trend, so look out for that occurring; similarly, one who only ever pays on the very last day of the deadline is worth giving greater attention to, although they may simply be managing their own money well.

In the first instance, a polite reminder can be all that’s needed – and only if this goes unheeded should the warning bells really begin to sound.

Drastic action can help to stop the rot quickly, so maintain a ‘stop list’ of clients who haven’t paid, and therefore you will no longer supply with work; you can be flexible with this if there are some who you don’t want to cut off completely, despite an isolated incident of non-payment.

Beyond that, it’s a case of embarking upon debt recovery action, including a court claim if necessary, as you should now be able to charge any reasonable recovery fees on top of the debt, rather than facing them yourself.

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