4 Steps to Avoid Being Victimized by Deadbeat Customers
If you're a small business owner, you can spend an awful lot of time in the muck of collecting, or trying to collect, bad debt. There's a good piece about this on the New York Times site today in which Jay Goltz, an owner of five businesses in Chicago, explains his experience in collections.
Goltz notes correctly that the biggest trap most small businesses fall into is extending credit when a client already has a significant balance due. You don't want to lose their business, so you let them have another $5,000. And then, surprise! They don't make any payments.
A business I know very well extended over $200,000 to a food service company, whose ethics were non-existent. The CEO had a meeting with the CFO of the debtor client and asked him how he could run up such a huge tab and then keep asking for more credit, and even discounts […]