Every so often in running a business you end up with customers who don’t pay their debt either on time, which isn’t all that bad since they’re eventually paying still, or those who go into bankruptcy or just decide to not pay their suppliers. This one supplier may be you. 

So how do you deal with such customers? First answer I’d give is more of a pre-emptive one. When first starting to supply to a new customer, never do credit sales and either require a prepayment or payment at the spot when making the sale. This way you can protect yourself from the risks of not knowing the payment discipline of a new client. It’s all about trust in business, but not blind trust.

Another method for protecting yourself is always requiring a prepayment (note here that some legislations forbid you to ask 100% to be paid before so generally it’s expected to be like 50% or something close). It means the customers must already pay something in order for you to start producing or shipping depending on what type of business you’re in. It’s a guarantee to you that the client is at least liable to some extent to pay up the rest and they’ve acknowledged it.

And that’s pretty much it. Binding people to contracts doesn’t really give you much support because it’s not the paper that pays the debt, but people. The best method to ensure you’re getting paid is to make some form of a background check for your customers, see if they’re trustworthy and/or require a prepayment.