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If your customer has these characteristics, he's unlikely to pay you on time

by , 24 June 2014
According to Intuit.com, in 2012, the Freelancers Union started an open letter to nonpaying clients dubbed 'The World's Longest Invoice.' To date, it's garnered thousands of responses from small-business owners and independent workers who've shared their stories and balances due. The grand total uncollected so far: $16 million.

This is proof of how dire the situation is when it comes to clients not paying on time or not paying at all.

The good news is you can avoid finding yourself in a similar situation if you stay away from problematic clients.

Read on to discover some telltale signs that indicate a customer is unlikely to pay your company on time.

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Beware! Nonpaying clients tend to have these characteristics

#1: Steer clear of clients who fail to meet your basic requirements

The co-author of The Entrepreneurial Mindset and an associate professor at Columbia Business School, Rita McGrath, says she's wary whenever 'they [customers] give you only a post-office box and mobile number for contact information. They fail to pay a deposit or down payment, even if you've asked for one and they ask for really long payments terms or they fail to sign a contract.'

If a client doesn't meet your basic requirements when it comes to payments, it's best to say no to their business.

#2: Beware of clients who aren't comfortable with the purchase

According to Zachary Lezberg, CEO of the Small Business Expo, if a customer isn't comfortable with the purchase, don't force it.

'You may get the sale by forcing it, but it'll backfire on you. Forcing a sale on a client is a red flag that something will go wrong down the road,' warns Lezberg.

He adds: 'That hesitant customer may be the one who dodges calls and ignores your emails about payment.'

You can't afford to overlook the next characteristic.

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One more characteristic you need to watch out for when it comes to nonpaying customers

#3: Watch out for customers who tend to lose invoices

The president and CEO of the National Association for Business Resources, Jennifer Kluge, says a nonpaying client may also ask for multiple copies of the invoices because 'it's lost,' or ask whether you accept credit cards when you've already specified that you don't...

She says you're also likely to get a sob story, like the client is waiting on a payment from a customer before he or she can pay you. You might even get a plea from the customer after you send the bill asking whether they can exchange goods and services instead of paying by cash or check. Or they might start nitpicking at the work or products as a way to avoid or reduce payment.

The bottom line: Nonpaying clients are a problem - they could sink your business. It's for this reason that experts behind the Practical Accountancy Loose Leaf always advise you to implement a credit control policy. It'll help you manage your working capital properly and avoid a cash flow crisis. So watch out for these characteristics and implement a sound credit control policy.

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