When a brand new customer applies for credit, most businesses do their homework.
They review financial information and check references. Pull a credit report, verify ownership, and set a credit limit.
Then, if the relationship goes well, the file can sit untouched for years.
That can become an expensive mistake.
On a recent episode of the Overdue Advice podcast, veteran civil litigator Howie Sniderman shared an observation that resonated with everyone in the room at the National Credit Conference.
When businesses ask him, “Should we sue?”
He comes back with a different, possibly more important, question.
“Will you be able to collect?”
The answer often depends on something many business leaders overlook.
The Customer You Approved May No Longer Exist
A company you approved five or ten years ago could look totally different today.
Ownership might have changed.
Key decision-makers may have moved on.
The business may have taken on significant debt, expanded too quickly, entered new markets, merged with another company, been acquired, or sold off major assets.
Or like tens of thousands of businesses in Canada, it could have been handed off to the next generation or allowed to wind down when the founder retired.
Sometimes even the legal entity changes while the familiar trade name stays the same.
None of those developments automatically create collection problems.
But they can massively change your level of risk.
Credit Decisions Shouldn’t Be Permanent
Many organizations revisit supplier contracts every year.
Insurance policies are renewed.
Budgets are updated.
And business plans evolve.
Yet customer credit files are often treated as permanent documents.
Credit is a business relationship, and every relationship changes over time.
Periodic reviews help make sure yesterday’s credit decision still makes sense right now.
Watch for Changes That Matter
A routine review doesn’t have to be complicated.
Pay attention when you notice changes such as:
- Payments gradually becoming slower.
- Requests for higher credit limits.
- New ownership or management.
- Mergers or acquisitions.
- Major expansion into new markets.
- Frequent changes in accounts payable contacts.
- Increasing disputes over invoices.
- News of layoffs, restructuring, or financial challenges.
One smaller change could be inconsequential.
But even that deserves a closer look.
Earlier Conversations Create Better Outcomes
One of the biggest advantages of reviewing accounts regularly is that problems become visible earlier.
Instead of discovering financial difficulties after an account reaches 90 days past due, you may identify changing payment patterns while there is still time to adjust credit terms, discuss expectations, or work with the customer toward a solution.
Those conversations are almost always easier before the relationship becomes adversarial.
Litigation Is Rarely the First Question
Legal action has an important place in commercial collections.
But before spending time and money pursuing a judgment, it makes sense to understand who your customer is today.
That was one of Howie Sniderman’s central messages in that podcast. (Check it out if you haven’t already.)
Due diligence shouldn’t end when credit is approved. It should continue throughout the relationship.
That approach helps businesses make better decisions, reduce risk, and improve the likelihood of recovering what they’re owed if collection efforts eventually become necessary.
Good Information Leads to Better Decisions
At MetCredit, we encourage businesses to think beyond the overdue invoice.
Understanding the current circumstances surrounding an account often leads to better recovery strategies and better business decisions.
The most effective collection efforts begin with the best available information.
Sometimes that information confirms your customer is simply experiencing a temporary challenge.
Other times, it tells a very different story.
Either way, knowing is always better than guessing.
If you need advice or have questions, reach out to my team anytime. Keeping your cash flowing is why we’re here.
