Once you have extended credit to a customer, you have a stake in continuing the relationship even if you suspect trouble is brewing. You don't want to crack down on a good customer too hard too soon; yet you don't want to be "taken" by a debtor who has become unable or unwilling to pay. The problem is distinguishing between slow payers and no-payers.
What you need is an early warning system to detect a credit problem in the making so you can stop additional sales to that customer and begin collection procedures in earnest. Here are some telltale signs of an account that is turning sour.
Any one of these hints of trouble can mean it's time to turn up the heat on your collection efforts with this debtor, and make no more sales unless they're cash on delivery. Contact us for more tips.
Jeremiah K. Murphy, CPA is an accounting firm providing tax services, audits and business consulting.