An invoice that is past its due date becomes less likely to be paid over time. To be exact, the chances of collecting payment declines by at least 1 percent for every week that passes. After three months, the likelihood an invoice gets settled drops down to around 75 percent. Once it is six months past due, the figure drops down to approximately 60 percent.
Because of this, it is important for businesses to be diligent in spotting the beginnings of delinquent customers so they could address it immediately. There are some indicators or red flags that a client would fail to settle its invoice on time. Examples are the following:
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Company is moving to a new location: Moving the company or office to a different site entails funneling cash into the relocation, which could mean that payments to vendors can be delayed, especially if the business failed to organize its cash flow properly.
Broken promises: Businesses depend on their customers’ integrity when waiting for payments. If the customer starts to break the promises or agreements that have been made, it is right to question their integrity and start being concerned whether they could settle their credit on time or not.
