Every time you send out an invoice, you run the risk that the customer will fail to pay. If this happens, your cash flow and profits may be hit. Worse: a large unpaid invoice can jeopardise the growth of your business or lead you to insolvency.
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Five signs that your customers are facing payment difficulties
1. Late payment
Is your customer trying to extend payment terms or failing to pay on time? It’s highly likely that he’s short of liquidity.
2. Dubious credit decisions
Has your customer entered into a major contract with a questionable buyer? Beware: unless your customer has put a clear credit management procedure in place with this buyer, his problems could soon be yours.
3. New borrowing
Is your customer always hunting for new finance, or does he frequently change bank? He may be acting that way because his current bank won’t grant him another loan which is not a good sign.
4. Tighter checks
Do the banks seem to be keeping a very close eye on your customer? It may be because he’s struggling to settle his debts.
5. An endless stream of excuses
Does your customer always have an excuse to justify non-payment? It’s probably because he’s too short of cash.
How to protect yourself against non-payment
Trade credit insurance protects you against financial losses caused by the non-payment of your B2B receivables. Payment for supplies of products and services is guaranteed, even if the customer goes bust. In the event of non-payment, Euler Hermes will pay your claim after 60 days.