1. Keep tight control of credit terms: these will lengthen as customers delay the date for payment to boost their working capital. Closely monitor debtor days and have escalation procedures in place to proactively address and pursue late payers.

2. Make good use of credit reports: ensure these are procured for key customers on a regular basis so that you can monitor their debt risk, see what their appropriate credit limit ought to be and whether they are collecting County Court Judgments. Do not be shy in reviewing credit terms quickly if a customer’s position deteriorates.

3. Get out of the office: take the opportunity to visit customers’ or suppliers’ premises to review their operations. You can get a very good feel for how their business is doing if you witness it first hand. Keep close to them.

4. Dust-off the contracts: contracts that were once profitable may no longer be so and customers and suppliers may look for ways out of them in order to cut costs. In order to do this they may look to enforce service level agreements or KPIs (key performance indicators) as a prelude to termination. Make sure you stay one step ahead on service and what you are obliged to do to comply with contracts that you need to keep.

5. Watch for excuses not to pay: obviously strive not to provide anyone with the basis for genuine excuses, but watch for inventions and alleged breaches or signs of legal input in correspondence. Be quick to challenge the basis on which payment is being withheld and request documentary proof of your alleged failings. A customer may look to delay as much as possible to keep hold of its cash, so be proactive, push and do not be shy to escalate the dispute to get it resolved. In the mean time, consider restricting supply or credit terms to minimise the risk of increasing your exposure while things are sorted out.

6. Watch for changes in behaviour: changes in key personnel, stalling over payment, erratic approach to payment, chasing you for payment more aggressively and the start of invoice factoring are all examples of changes in behaviour that may indicate a worsening of the financial position of your customer or supplier. Take steps to reduce credit terms, review contractual rights and obligations and seek alternative sources of supply just in case your supplier becomes insolvent.

7. Obtain alternative sources of supply: if the above factors are beginning to occur or combine then ensure that you have an alternative source of supply on stand-by. Doing so with time to spare should help you obtain more favourable terms than going to an alternative supplier when your original supplier has just gone insolvent and you have a significant order to meet within a very short timeframe.

8. Make use of retention of title clauses: until payment is made, title in the goods is retained by the seller. This may be useful commercially where a customer is delaying payment and may afford you additional protection should the customer cease to trade.

9. Guarantees/indemnities: whether provided by a bank, parent company or individual, these are only as good as the person providing them. However, these ought to be considered to provide you with an additional layer of protection should your supplier or customer default on their obligations.