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21 warning signs that your customer can’t afford to pay you


An invoice has gone overdue and you’ve started your procedure to recover that payment. But how do you know if the customer simply cannot afford to pay you?

Here are 21 signs that your customer might be struggling financially.

Whilst one of these signs on their own might not start alarm bells, if you recognise multiple red flags from this list you could be dealing with a customer that simply cannot afford to pay you.

1. Broken promises

When a customer promises to pay but doesn’t follow through, it could be time to start to question their integrity and ability to pay you. How many chances are you willing to give them?

2. Unreturned phone calls

If your calls are going unanswered and you’ve left multiple messages or emails without a reply, it might be a sign that your customer is avoiding you and is unable to pay.

3. Changes in payment patterns

When you notice that a repeat customer’s paying patterns are changing, it could be time to start questioning their cash flow – particularly if they always used to pay well in advance of due dates.

4. Changes in buying patterns

Similarly, sudden changes in how much your customer is purchasing from you could also be a sign that they are having cash flow difficulties, which could in turn lead them to delay payment in the future.

5. Excuses

There’s a whole range of excuses a business can come up with to stall or avoid making payment. If a customer is going through the repertoire, or their excuse just doesn’t seem genuine, you should question their ability to make payment.

6. Demands payment by cheque

Cheque payments give the customer all the power and even more time, factoring in the postal service and time it takes for cheques to clear. So, if you have a customer that demands to pay by cheque it could signal that they are in trouble.

7. Signed-for letters are returned or unclaimed

If you’ve sent the customer a letter which hasn’t been signed for or it’s been returned, it could be a sign that they’re avoiding you or aren’t at the address that they provided.

8. Customer disputes services

Whilst disputes can occur at any stage of the sale process, if a customer suddenly has objections that were never stated before it could be that they’re making any excuse possible to not pay you.

9. Request an extension

The occasional request for a payment extension is probably not a serious concern, but if the client continually asks for an extension then you’ll know that something’s not right.

10. Change in behaviour

Get to know your customers and their normal behaviours because any sudden changes could signal cash flow difficulties. This can range from their telephone manner to the tone of their emails.

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11. Management resignations

When a number of top-level executives resign over a relatively short period of time, it could be a sign that the company isn’t performing very well.

12. Sudden stock/asset sales

If the company is suddenly selling assets or stock at sale prices it could be a way of minimising outgoings or bringing in extra money to pay upcoming bills – and your invoice may not feature too highly on their priority list if that’s the case.

13. Reduced service levels

When a company which previously provided high-quality service is suddenly struggling to maintain those standards, it could suggest that something is wrong.

14. Rapid business expansion

Whilst expansion may seem like a positive and shouldn’t be regarded as a warning sign by itself, when coupled with some of the others here it could be a cause for concern. This is because companies which overtrade can suffer cash flow difficulties if the business does not have the adequate resource to meet increased demand.

15. High turnover of staff

If a company is struggling, their staff may decide to seek other employment either for security or to escape an unpleasant working environment.

16. Late filing of accounts

Take a look at your customer’s filed accounts. The information provided could give you insight into their financial health. Late filings in particular could be a sign of trouble.

17. CCJs

Credit reports and the Register of County Court Judgments (CCJs) will reveal if your customer has any CCJs against them, which shows that they have a history of not making payments.

18. Bad credit rating

Credit reports can also provide valuable insight into the financial status of your customers. Be sure to check these throughout your relationship so that you don’t miss any sudden changes.

19. No accounts payable department

This isn’t an automatic red flag but be wary that if a single person is taking responsibility for a number of different jobs, paying bills may not be their top priority.

20. Disorganised customer

A flaky or indecisive customer isn’t just frustrating, it could be a warning sign too. Can you trust that they will pay when they seem unorganised in every other aspect of business?

21. Gut feeling!

Sometimes you just know. If you have a gut feeling that a customer might be struggling financially then at the very least you should proceed with caution.

If you’re worried that a customer isn’t going to pay we could help. We’re familiar with just about every warning sign there is and can advise on the best way forward. To discuss your options and find out how we can assist, contact our team on 0800 9774848 or get a debt collection quote.


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