Credit risk.
WHAT THE RISK IS
Work done or goods supplied, and payment never received.
HOW COMMON
The most frequent financial loss small businesses actually experience.
WHAT REDUCES IT
Deposits before starting Payment before delivery, where practical Staged payments on larger work Clear terms Prompt invoicing and chasing
THE DEPOSIT POINT
For any substantial work, a deposit is normal and protective.
WHAT TO ASSESS
New customers, before extending credit Existing customers whose payments are slowing
WHAT TO WATCH FOR
Payments becoming later Disputes raised at payment time Reluctance to agree terms
WHAT TO DO ABOUT A POOR PAYER
Change their terms: advance payment, or smaller stages.
WHAT TO AVOID
Continuing to supply someone who owes you substantially.
Exposure grows and recovery becomes harder.
WHAT TO RECORD
Every invoice, its due date, and every contact about it.
WHAT MAY BE AVAILABLE
Credit insurance exists in some markets. Ask a broker whether it suits.
