Signs of Financial Trouble

Iinancial Troublen our experience businesses can expect to have credit losses of one to six percent without serious problems, a number that varies depending on markup and other factors.

However, it is important to keep a careful watch on this figure and it’s impact.  Any losses above this percentage will cause serious problems if not controlled by the company credit manager.

Below are some common signs to help you recognize when your customers are in over their heads.

CUSTOMER PAYMENT HABITS:

  • Asks for extended terms
  • Slowdown in payments
  • Pays by partial payment on account
  • Record of bad checks
  • Default, followed by request for lower payment schedule
  •  Irregular payments
  •  Admission by your customer that other bills must be paid first
  •  Partial payments of steadily decreasing amounts
  •  Repeated defaults–always with an excuse (lost invoices, check lost in the mail, bill not received, quality complaints, no one available to sign checks)

COMMUNICATION PROBLEMS:

  • Evasiveness of principals
  • Inaccessibility of management
  • Is excessively irritated by your debt recovery calls
  • Failure to return phone calls or respond to letters
  • Customer defers to his attorney
  • Telephone disconnected
  • Mail returned undeliverable

NEGATIVE FINANCIAL DEVELOPMENTS:

  • Increased requests for credit references
  • Poor previous business record of the principals
  • Other creditors taking collection action against your customer
  • Federal or state tax liens
  • Poor financial statement (high debt to equity ratio, negative net worth, negative cash flow)

Recognize these signs early and take immediate action to reduce your risks.


 

Please visit Dynamic Legal Recovery’s website or call us at 877-777-7564 for your complimentary evaluation.

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