Protecting Your Business, and Your Bank Account, in Case Clients Don’t Pay (Published 2016)

Not all small clients will be able to provide you with an aging or customer history report, but always ask for one.

Likewise, set a limit on the total money invested in the invoices of any customer, and establish the dollar amount of the largest invoice you will buy.

4. If a company’s short-term debt keeps expanding, but its inventory and accounts receivable grow even faster, it is using banks to compensate for poor working capital management. Eventually, the banks will stop management from continuing this practice by threatening to call or actually calling the loan (demanding repayment), which they can do on very

Consequently, a business may be short of cash until payment is received.

Communicate payable policies for the business in writing on all contracts and invoices.

•To add insult to injury, if a customer does pay its bills to the business and then files for bankruptcy within 90 days of that payment, under the “Preference Payment” rules, the trustee overseeing the proceedings might seek court intervention to return that cash payment to the debtor’s estate. In short, even after a business gets paid, the cash pa