What Should I Do If a Company Is Not Paying Me?

The first step is learn to spot the warning signs early. 

Are you dealing with a customer, or a debtor?

Once you've extended credit, provided a service, or shipped a product, you have a stake in continuing that relationship, even when trouble seems to be brewing. You don't want to crack down on a good customer too hard, too soon. But you also don't want to be taken advantage of by someone who has become unable, or unwilling to pay.

The hard part is telling a slow payer from a no payer. What you need is an early warning system: a way to catch credit problems while they're still forming, so you can stop additional sales to that account and start collection procedures before the balance grows or if the company goes out of business or files for bankruptcy and leaves you with nothing.

Here are the 6 telltale signs we watch for at Commercial Collection Firm of America when a customer starts down the path toward becoming a debtor.

1. Broken Promises

Your business relies on a customer's integrity when you accept a payment date or agree to keep providing services or selling them product. When a customer starts breaking those promises, it becomes your right to start questioning that integrity.

Late-paying customers don't keep their word. If a client breaks a promise more than three times, that's a strong signal they're headed down the wrong path, and it's likely part of the reason they're not paying now.

2. Unreturned Phone Calls

Voicemail has become the perfect tool for a customer who wants to ignore an obligation. To cut through that, always include a clear deadline in your voicemail message.

If you've left more than one message without a return call, there's most likely a problem. To improve your response rate, always follow up a call with an email. This also covers you in situations where the customer is legitimately on vacation or buried in work. The moment a customer becomes harder to reach, it's time to start investigating, before they turn into a late-paying account.

Remember, always stay professional in your communication.

3. A Spike in Reference Requests

If other vendors suddenly start asking you for references on your customer, that's worth paying attention to. It can mean your customer is overextended and shopping for credit from new sources because their usual vendors have already flagged them as slow to pay.

Be cautious about extending additional credit or extra time to this customer. It's also good practice to keep the contact information for those vendors on file. You may need to call them for a reference of your own down the road.

4. Changes in Payment Patterns

When a customer's payment pattern starts to shift, don't be afraid to ask questions about their cash flow. Do a little research to understand what's driving the change. That will help you decide whether to extend more time to pay, or place them with a commercial collection agency.

If the customer is still communicating and clearly trying, that counts for something. They may simply have hit a rough patch. Either way, keep the conversation going. But if a customer starts avoiding you altogether, it's time to protect your receivables and assume they're on their way to filing bankruptcy or going out of business. Don't extend more time to a customer who keeps dodging you.

5. Changes in Buying Patterns

If a customer starts buying less from you, they may be seeking credit from other suppliers in your industry. Companies facing financial pressure often have to spread their purchases around just to keep the lights on.

This is a good moment to conduct a business background report and see what's actually happening with their finances.

6. Cash Flow Excuses

Every business goes through an out-of-character stretch with cash flow, and that alone isn't a red flag. It's normal. Your job is to verify the excuse and work with the customer to agree on a firm deadline. If they miss that deadline, you now have a problem and debt is not like wine, it doesn't get better over time.

If a customer keeps citing cash flow issues, it's time to evaluate whether they still deserve additional credit. Call the references listed on their credit application and find out if they're treating every vendor this way, or if they're just treating you like a bank. If it's the latter, start the commercial collections process right away.

A customer with real, occasional cash flow trouble won't always become a late-paying account. But until they start meeting their deadlines, it's on you to protect your receivables.

What To Do Next

Once you've seen two or more of these signs, don't just keep watching. Act.

Stop extending additional credit. This is the first and easiest step, and the one businesses put off the longest. If a customer hasn't paid what they already owe, don't add to the balance.

Move them to cash on delivery. If you need to keep the relationship going, do it on their dime up front, not yours. This protects you while still leaving the door open if they turn things around.

Set one firm, final deadline in writing. Not another verbal promise. Put the amount owed and the date in an email or letter, and be clear about what happens if it's missed.

Send a formal demand letter. If the written deadline passes, a demand letter carries more weight than another phone call. It shows the customer you're serious, and it starts building the paper trail you'll need if the account goes to collections or legal action.

Request a Free 5 Day Demand Letter.

Know your handoff point. Most businesses lose leverage the longer an account sits. As a general rule, if an account is 60 to 90 days past due and the customer has gone quiet, stopped negotiating, or broken a written deadline, that's the point to stop handling it internally and place it with a commercial collection agency. The longer you wait past that window, the harder the account becomes to recover.

Document everything along the way. Every broken promise, missed call, and skipped deadline matters if the account ends up in collections or in front of a judge. Keep dates, amounts, and copies of correspondence.

The Bottom Line

If you're having trouble telling which one you're dealing with, Commercial Collection Firm of America has spent over a decade helping businesses make that call.

Reach out today for a free consultation by clicking the link below, and let us help you protect what you’re owed.

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Or call 1-888-799-3649 and speak to one of our commercial collections consultants today.