Use your Accounts Receivable reports
Every few days check your accounts receivable graphs to see what’s going on.
The top 5 debtors report is interesting as it shows if there’s a growing exposure to a few debtors. It’s important to check when they last paid you anything. You may find that some partners are struggling and you don’t want to be the last of their creditors to notice. You will be competing against their other suppliers to get the cash so it’s especially important these days to spot bad payers early.
If you suspect that someone is having difficulties then check with their other suppliers. If it is someone that you regularly provide goods and services to always demand payment for goods to date before supplying new goods. You need to minimize your exposure not increase it.
Many people having problems will try to trade their way out by asking for more goods and services from you. The problem almost always gets far worse so you need to reduce your risk. Demanding payment is a good way to test whether they are having problems or not.
If you are not getting paid that may be an indicator that your customers aren’t happy. Directors of companies and auditors will often call older debtors to find if there is some issue, so a healthy Accounts Receivable system is important to show you have a healthy business.