How To Prevent & Detect Unpaid Customer Invoices

Do you know how to spot the warning signs that your customer is about to go bust so you can safeguard against the consequences?

As a business, you rely on your customers and their ability to pay on time. This is at the heart of your positive cash flow which, as we all know, is key for any company. If one of your customers does not pay an invoice, this can be a serious threat to your financial stability.

To give you an example of the threat to business growth because of nonpayment, if you lose 22,420 USD from a non-payment, and you have a profit margin of 5%, you would need to sell an extra 448,406 USD to replace that profit. There are ways to protect your finances by reducing this risk. This includes knowing your customer and monitoring changes in their behavior. That way you can prepare a buffer, protecting your business against nonpayment and leaving you able to focus on growth.

Ten Signs Of Customer Non-Payment

10 Signs Your B2B Customer Won't Pay

1. Are There Erratic Or Late Payments?

Is your customer trying to change payment terms or failing to comply with your credit agreement? It's likely that they may be suffering from a volatile cash flow.

2. Is Your Customer Taking Questionable Credit Decisions?

Did you customer just land an abnormally large sale with a suspect buyer? Be wary of downstream risk. If you customer is not practicing prudent credit management, its mistakes could become your own.

3. Are There New Financial Processes?

Is your customer in the process of securingnew financing or changing banks? They may be doing this because their current bank won't lend them additional funds, so it may be wise to treat them with caution.

4. Do You Hear Excuses, Excuses, Excuses?

Non-stop excuses from your customer for not delivering payments are generally a tell-tale sign that trouble is on the way.

5. Is There An Increase In Credit Checks?

If your customer is experiencing a constant stream of checks fromcredit providers it may signify that the company is having trouble paying its current creditors or is desperate for credit to cover cash flow needs or recover from financial losses.

6. Are There Changes in Buying Behavior? 

If the customer starts to purchase erratically after a consistent pattern or increases its purchases dramatically in a short timeframe, you may want to inquire about the reasons behind the behavior change.

7. Are There Changes In Buying Behavior?

Have you noticed an increase in bad press or public complaints on social media and review sites? If a customer shows signs of skimping on their service and/or products, it could signal trouble.

8. Does Your Customer Keep Asking For Extensions?

Have you been getting unexpected or more frequent requests to extend payment? a one-off extension may be normal but if a new pattern emerges, it may be putting off an inevitable non-payment.

9. Are There Structural Changes?

Broad-sweeping or unusual changes in management could signal a problem on the horizon. Pay attention to changes that don't seem in line with past history -- especially if they bring on a restructuring officer.

10. Is Your Customer Not Returing Calls?

No answer? A problem. If a customer won't contact you after repeated attempts to reach them, it's time to take action.

useful description of image if informative and not decoration only.
You can also call an expert at 410-316-6164
We're always producing new content to help businesses understand economic trends and navigate trade uncertainty.
Sign up for our newsletters to make sure you don't miss anything.
Subscribe Today