How do you know when to gauge good customers vs bad customers? Is the dichotomy of good customers vs bad customers even appropriate? Well, the depends on what kind of business that you are in, but it is possible, if you are running a bank or a credit union, to have customers who do not follow through on their promises or otherwise issue bad credit.
If this is the case, then companies need to be prepared to use debt collection solutions and debt recovery tools to collect on the money that is owed. That being said, collecting on debts is a long a bureaucratic process and it is highly regulated. For example, in the case where someone is bankrupt, it is illegal to send any sort of correspondence to their business to collect the debt.
There are other ways that debts can be difficult to collect. For example, a business can write off its bad debt in its expenses, but this means that it will not have the cash flow that it needs to keep its head above water. This is often done through the allowance method which is the most common method for writing off bad debt.
There are ways of bring prepared for this. For example, most companies that give out credit and loans keep reserves to anticipate these sorts of problems. With that in mind, though, companies should have some estimation as to how many of their customers are likely to turn out to come up short when paying back their debts. This is something that every company has to anticipate and plan for. Small business debt recovery is one way that you might work these things out, but be sure that you can always make your bottom line when you do.
Business is not something that is easy for anyone, but to do business and to economize is to make predictions about the future of cash flow. Making these predictions is the first task of any successful businessperson and at times it means being prepared for the chance that things might go south fast. Find more on this topic here.