When it comes to clients, any experienced entrepreneur will tell you that they’ve developed a sixth sense. Some clients give off certain warning signs that they’ll be difficult to pin down when it comes to paying the bills. These are the people who tend to order our business credit scores and reports; they’re the people want to know if their hunch is accurate, and they take steps to contain their exposure if it is.
Here are three common warning signs of a slow-paying or non-paying client. None of these clues are a substitute for ordering a business credit score, of course, but if your client is making these kinds of excuses, it’s a sign you need to dig deeper into their financial history - and soon.
1. Emails Go Unanswered
Clients are generally very keen to get going with projects. When it comes to paying the bills, they might be less enthusiastic.
If your client’s stopped replying to your emails, it’s a bad sign, and a warning that you should probably order a credit score on their business to find out if anything is amiss.
2. Promised Payment Never Arrives
Some clients apologise and promise payment the same day. They seem very genuine, but by the time a third or fourth promise is broken, you’d be forgiven for being sceptical about their commitment.
Some clients do have genuine reasons for letting people down, but if it keeps happening, it’s time to check out the company’s credit score in case you need to be more firm.
3. Good Client Goes Bad
In the beginning, many clients are enthusiastic and pay bills rapidly. Over time, as the project progresses, their commitment may wane. Eventually, they’ll start to pay late and miss your deadlines.
Naturally, this tends to happen towards the end of a contract when there’s less urgency to pay you; you may just need to remind them of their commitment. But over long contracts - say, several months or more - there’s scope for the company to have hit the wall financially, and they may have run out of cash. The only way to prepare yourself is to assess their business credit score and see if anything’s changed.
I’ve Got the Business Credit Score. Now What?
The business credit score provided by CheckMyClient is calculated using our unique internal algorithms to give you a solid indication of risk. Armed with accurate information about your client, you can take steps to address their non-payment. You can review any CCJs they’ve accrued, check their balance sheet and review the recommended credit limit provided. You may want to scale back the amount of credit you offer to the client, or shorten their payment terms to ensure problem invoices can be dealt with more quickly.
The most important thing is to order the credit score for the business before the situation gets out of hand. If that business builds up a huge amount of debt with your company, that business is probably racking up debts with other companies, too. If you’ve reviewed their credit score in good time, you can take action and ensure you get paid as a priority.