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Is Your Customer’s Account Heading for Delinquency? Here Are 6 Early Warning Signs to Watch Out For

No business owner wants to see a customer fall behind on their payments. But sometimes, despite your best efforts, it happens. If you’re worried that a customer’s account might be heading for delinquency, here are six early warning signs to watch out for.

1. The customer is frequently requesting extended payment terms. 

If a customer who previously paid their invoices on time suddenly starts asking for longer to pay, it could be a sign that they’re struggling to keep up with their financial obligations. Of course, there could be other reasons for the request (e.g., they need to conserve cash because they’re expanding their business), but it’s always worth following up with the customer to see what’s going on.

The longer amount of time that a customer spends with you, the more you will start to notice their ebbs and flows. Don’t make mountains out of every molehill, but do stay on top of each individual account so you can be mindful of changes into their payment deliveries. 

2. The customer is making partial payments. 

Customers who start making partial payments instead of paying their invoices in full may be trying to stretch their cash as far as possible. This can be a sign that they’re having trouble making ends meet and might soon fall behind on their payments altogether.

If a customer does this once, it’s no big thing. When they start making a habit of it, however, you need to start doing a little more investigating. After all, their cash flow issues can become your cash flow issues in time. 

3. The customer is constantly changing the contact person you should speak to about their account. 

When a customer starts changing the point of contact for their account frequently, it can be a sign that they’re trying to avoid someone (likely someone in your collections department). It could simply be a matter of life circumstances, hiring difficulties, and shifting positions around until a permanent hire is made. This isn’t necessarily cause for alarm, but it’s worth keeping an eye on.

4. The customer is no longer responding to your attempts to contact them about their account. 

If a customer stops responding to your calls and emails about their delinquent account, it’s a clear sign that they’re trying to avoid dealing with the issue. At this point, you’ll need to decide whether you want to continue trying to collect payment or write the debt off as bad debt.

5. The customer is making excuses for why they haven’t paid their invoice yet. 

When customers start making excuses for why they haven’t paid their invoices yet, it’s usually an indication that they don’t have any intention of paying them anytime soon. If you’ve been hearing a lot of excuses lately, it’s time to start considering your options for collecting payment.

6. The customer has stopped doing business with you altogether. 

If a customer who previously did business with you regularly suddenly stops ordering from you completely, it could be a sign that they can no longer afford your products or services—and that they might soon fall behind on their payments if they’re not careful. Of course, there could be other reasons why the customer stopped doing business with you (e.g., they found a cheaper supplier), but it’s always worth investigating further just in case.

Notice These Early Warning Signs Before It Is Too Late

No business owner wants to see a customer fall behind on their payments—but sometimes, despite your best efforts, it happens. If you’re worried that one of your customers might be headed for delinquency, keep an eye out for these six early warning signs: frequent requests for extended payment terms, partial payments, constantly changing points of contact, lack of response to attempts to collect payment, excuses for non-payment, and stopping doing business with you altogether. 
By being aware, you can take steps to protect your business if a customer does start falling behind on their payments. And if you need extra support and organization with collecting past-due accounts, there is no better way to do it than with Southwest Recovery Services. Our full-service debt recovery firm is here to guide you through the process, from administration to customer service and all points in between. Contact us today!

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