All businesses lose clients. The revenue from these clients must be replaced to maintain a profitable growing operation.
Yet, there is a significant risk in working with new clients. Of 10 new clients, 6 will pay on time, 2 will pay in 60 days, and 2 will become a receivable problem.
The profiles of new clients that become a receivable problem vary.
- New business – 20% of all new businesses fail within 18 months of startup.
- Clients that experience a contraction in their own business.
- Clients that receive one-time, new orders from companies that have problems. These companies leave a trail of unpaid invoices.
Current statistics are still discouraging. Of the 795,890 bankruptcy cases filed in 2017, 6,999 were commercial filings.
Down slightly so far in 2018, the number of bankruptcies will be large and can have a definite impact on your bottom line.
The firm that wins is the firm that stays actively aggressive in pursuing delinquent receivables.
At 90 days or sooner, the decision should be made to place accounts for collection.
After 90 days, on average, 10% per month is lost on any unpaid balance.
[ Related: Collectively Speaking: Timing is Everything ]
Suggestions? Take this short survey.