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Needless to say that when debtors are not paying us on time, we need to raise our alertness level as this can ultimately lead to a future bad debt.

So what might be some of the warning signs of a future bad debt?

Some examples are as follows:

• longer credit terms taken with approval, particularly for smaller orders
• use of post-dated checks by debtors who normally settle within agreed terms
• evidence of customers switching to additional suppliers for the same goods
• new customers who are reluctant to give credit references
• receiving part payments from debtors.

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