As a business, we are hurt when are faced with a bad debt and the cost to chase up debts can be initially too expensive, and secondly, can take too long. Worse than that is when a debtor threatens to get physical with you, not in words, but a gut feeling, so in the end, we just walk away from the debt.
So, how can business better protect itself from bad client? We can do reference checks, but they are always good, and even doing a credit check will not identify a problem account every time.
So perhaps we need to get smarter, I know I now have to. So what steps can I take to make sure an invoice will be honoured by a client?
I will of course visit the client to make sure they exist and get a â€œfeel for them, but even then not perfect.
However, I now feel that I need to look at things like demographics and locations. The last 2 accounts we have had with bad debts, both clients were based on older type industrial estates, in what can best be described as less than affluent areas.
So, is this now to be my new way of vetting potential new clients? Where their office is located?
Possibly not, but certainly, another aspect to consider when taking on a potential new client.