Signs and Symptoms of Bad Debts

First few signs of impending bad debts:

• A sudden increase in order
  
  • It may mean that the customer has lost credit with another supplier and is ordering more from you to fill the gap

• Payment become increasingly slow
  
  • The customer may have cash flow problem

• Groundless complaints about shipped orders or excuses about invoice misplacements etc.
  
  • The customer may be stalling time to delay payment

• Makes partial payment instead of the agreed full payment

• You receive numerous excuses on non-payment
  
  • For e.g. change of accountant, management, busy festive period. misplaced invoices etc.

• Makes payment for smaller amount even though earlier outstanding invoices are not cleared according to date
  
  • The customer gives excuses about mixed up invoices such that they can pay off the smaller amounts instead

So, if you see any of these bad debt warning signs, do exercise extra caution in extending additional credit to your customers.

And I'd like to hear from others too who have experienced bad debts. Do share your comments so that we can all learn and avoid getting ourselves into bad debts situations.