How to Avoid Bad Debt in 4 Steps

Bad debt is a business killer; if you don’t have the proper systems and precautions in place, your bad debt could potentially ruin your chances of finding entrepreneurial success. The good news is, bad debt recovery and debt settlement solutions exist to help business owners prevent such an end, and if you think proactively enough you can avoid the situation to begin with.

Do it yourself debt settlement exists to help business owners take care of their bad debt positions before they begin to compromise the integrity of the company, and without needing to contact legal or financial experts to do it. As part of Know Your Customers’s commitment to improving the quality of resources available to business owners, we present these four steps to avoiding bad debt:

  1. Treat New Customers Cautiously. Use Know Your Customers’s online research tool to research your potential new customers before you bring them on board. If your potential customer has a long standing history of failing to pay their bills, perhaps you should seek different clientele.
  2. Get the Right Systems in Place. Make sure you have a solid invoicing and processing system in place, and make sure it is consistent. Include due dates on all your invoices in a consistent manner, and have a regular schedule to follow up on those that are unpaid.
  3. Be Firm and Reasonable in Recovering Dues. Sooner or later, a customer will fail to pay you. Follow up with them in a firm, yet reasonable way, and give them options to remit payment. If you are firm and patient, you’ll see great results.
  4. Know When to Advance Things. Sometimes, you’ll be stuck without a payment for an extended period of time. If this happens, consider extra debt settlement solutions or resources like Know Your Customers to help settle the debt.

With these four steps, you can proactively prevent and sustainably manage your bad debt recovery.


If you’re interested in recovering your bad debt from customers who don’t pay or if you need to search an individual or business, make sure to sign up for KnowYourCustomers!