A: Slow receivables can be more of a problem than bad debts. It's an expense to carry slow paying customers. Not only does the value of money depreciate over time, but it may be costing you money in bank interest charges associated with maintaining those receivables and your overhead. This cuts into your profitability as well as causing cash flow problems.

My advice is not to ignore the problem. First of all, be sure that you have a system for sending regular statements. Not sending statements gives the client an excuse to ignore or forget about your invoice. Your credit policy should be printed clearly on all invoices and statements.

Communication is important. Pick up the phone and talk to your delinquent customers (i.e. any account that's over 90 days). Tell them that you expect to get paid on time. Send them a copy of your credit policy (tighten it up if necessary). Ask if there's a reason why they're taking so long to pay, and suggest that you're open to discussing ways to get the invoice paid. This will separate out those who just can't be bothered to pay on time from those who genuinely can't pay.

Sometimes it's enough to simply explain to a slow-paying client that you know they'll eventually pay their bill but that you can't afford to have your bottom line affected by the cost of carrying and collecting overdue receivables. If that doesn't work, their business may be in trouble and you need to take immediate action. At this point, I'd recommend threatening to cut off credit if the account is not brought up to date and kept there. (Of course you'll have to be willing to act on the threat!)

Keep your eyes open for signs of a company in trouble. These include broken promises of payment, unreturned telephone messages, post-dated checks, change of banks or a clearing out of merchandise at unusually low prices.