Defaulters: The signals by which you recognize them.
Sooner or later, every company will have to deal with a defaulter. If your customers suddenly don’t pay correctly any more it has consequences for your cash flow. To avoid this, it's better to recognize a defaulter in time. Below we'll give you a few tell-tale signals that should ring alarm bells.
There is a change in the payment pattern.
If your customer always paid smoothly within the agreed period but hasn't been paying lately, then something's not right. It doesn't necessarily mean that there is a financial doom scenario hanging over his head, but you'd better give him a call about it.
Disputes about the order or invoice.
Was your customer usually satisfied but suddenly he has started systematically complaining about your service, product or invoice? Is the quality no longer satisfactory according to him? And does he start demanding refunds or discounts? Then there is a chance that he has internal, financial problems.
Another way of communicating
If your customer starts ignoring payment invitations, systematically asking for postponement and is increasingly difficult to reach, it often points to problems within the company.
Take a closer look at your client's management from time to time. High-level internal changes are often a health barometer for companies. Especially on a financial level.
High staff turnover
Employees within the company feel it better than anyone when the financial situation of a company is deteriorating. Do you notice that there is a lot of staff turnover with your client? If so, perhaps that's a good time to check his creditworthiness again.
Negative news in the media
Bad news spreads like wildfire. When your client's in a bad situation, you're guaranteed to read it somewhere. So be sure to read the reviews or articles that have been published about your client.
What can you do as a supplier?
- Check their creditworthiness
Regularly checking the creditworthiness of your customers is a good idea anyway. Make sure you anticipate possible problems.
- Develop a policy
Checking creditworthiness is one thing. But what do you do with the information that provides? Determine in advance how you will proceed. In which cases do you want to proceed? From when do you refuse new orders if invoices are still outstanding? A good policy not only ensures transparency towards your customers but also offers your employees a roadmap.
Make sure you have clear terms and conditions.
Preferably never refer to your general terms and conditions. But if you need them, they better be in order. So, first and foremost, make sure you have them. Then ensure that your client has accepted them. Don't have one yet? Then start now.
Make a plan for your accounts receivable management.
How soon will you send a first reminder? How many reminders are you going to send? Through which channel (mail, registered letter...)? When will you stop sending reminders and what will you do? Draw up an action plan for yourself and your employees.
And if things go wrong?
Then you turn to Unpaid. If your customer still doesn't pay despite all your mails, reminders and efforts, we take action. Initiate your file in a few simple steps and we'll get to work.