New Venture Lab: Equipping Christian Entrepreneurs

Have you ever had to give a client company a buzz to find out where their payment is? Or have you had to tell them that unless they send a check, that they will be hearing from your lawyer?  The best way to avoid payment problems is to avoid problem customers.

Here are some tips:

• The most powerful predictor of payment performance is payment record (current and past), so check new prospects' references.
• Credit ratings based on financial strength have no bearing on future payment
  performance. Another reason why you need to check references.
• Revenue is not a good indication of good payment performance.
• The greater the firm's net worth (total assets less liabilities) and time in business,
  the more likely it is to pay. Building real net worth takes years.
• Most businesses fail in the early years, so the longer a firm is in business, the more confident you can be of receiving timely payments.
• The higher the percentage of accounts a customer has paid within 90 days, the
  greater the likelihood you will receive prompt payment.
• A predictor of future poor payment is the number of accounts past due 90 or more days.
• A customer's or prospect's prior bankruptcies and tax liens may signal that you
  will have great difficulty getting paid.

By guest blogger Ty M. Bollinger, CPA

"A false balance is an abomination to the Lord, but a just weight is His delight" -- Proverbs 11:1