• Letters sent to debtor returned undelivered

• The debtor’s family says he has moved but refuses to disclose his whereabouts

• The debtor denies responsibility

• The debtor asks you to sue him

• The debtor says, “If you press me, I’ll go bankrupt.”

• Another creditor has initiated claims against the debtor

• The debtor is a shell company whereby the directors say that they are not personally liable
  • This is totally untrue! As a director of a company, the person is liable for its debts etc.

• Change of ownership of company

• There’s rumors in industry about debtor experiencing financial difficulties
  • If you can, do maintain a good relationship with other customers and working partners in your industry so that you’ll be in the grapevine

• Debtor’s sector is adversely affected by economic trends
  • For eg. You can observe from a retail business that business is slowing down and whether they have enough customers to sustain their business

• A sudden increase in order
  • It may mean that the customer has lost credit with another supplier and is ordering more from you to fill the gap

• Payment become increasingly slow
  • The customer may have cash flow problem

• Groundless complaints about shipped orders or excuses about invoice misplacements etc.
  • The customer may be stalling time to delay payment

• Makes partial payment instead of the agreed full payment

• You receive numerous excuses on non-payment
  • For e.g. change of accountant, management, busy festive period. misplaced invoices etc.

• Makes payment for smaller amount even though earlier outstanding invoices are not cleared according to date
  • The customer gives excuses about mixed up invoices such that they can pay off the smaller amounts instead

So, if you see any of these bad debt warning signs, do exercise extra caution in extending additional credit to your customers.

And I’d like to hear from others too who have experienced bad debts. Do share your comments so that we can all learn and avoid getting ourselves into bad debts situations.