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Will that new customer pay? Here’s how to tell.

December 29, 2011

Make sure your company avoids bad payers.

Here’s how:

  1. The most powerful predictor of payment performance is payment record — contact each reference.
  2. A prospect’s credit rating has no bearing on future payment performance — Another reason to check references.
  3. Revenue is not an indication of payment performance.
  4. Building real net worth takes time so, the greater a firm’s net worth (and hence time in business), the more likely it will pay.
  5. Most businesses fail in the early years so, the longer your prospect has been in business, the more confident you can be of receiving timely payments.
  6. The number of accounts past due 90 or more days is a predictor of future poor payment.
  7. Prior bankruptcies and tax liens may signal real problems.

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