This was an old Benjamin Franklin saying, but it is as true today as it was then, especially when dealing with your either client or potential clients. When you set up what may be an ongoing sales or business relationship with another person or business you should always have them fill out some type of credit application/check form with references, bank, and business information on it. You can find any standard form online and maybe even tailor it to your needs if necessary.
This accomplishes several things. One, any business or person that has bad intentions will probably think twice about trying to not pay their bill because they are a bit more exposed to you. Two, it will give you enough information so that you can check and make sure that you are dealing with an established and legitimate business. You should be looking at things like: do they have a storefront or are they working out of a P.O. Box, are they registered with any associations such as the local Chamber of Commerce or Better Business Bureau, how long they have been in business, business references, etc.. The third advantage is that if you do have to collect you will have their bank account information on file, and bank levy is the easiest and most efficient way to collect on a judgment.
Following this simple process will likely cut down on your accounts receivables and if a business does end up owing you money, it will make your ability to collect that much easier in the long run. If they balk at the idea, then you might want to ask yourself, or them, why? Depending on their answer you might choose not to do business with them. Either way you will know your customer/client a little bit better and the decision is yours with the knowledge you have gained.
