When it comes to delinquents, there are three types of customers, two of which also have subtypes. It is necessary to understanding what "type" a customer is so that you can approach him or her with the best strategy to collect.

Type I--Slow Pay

1. Those who are practicing "cash management" and purposely paying slow (common in large companies).
2. Those who are disorganized, indifferent, or lazy (common in small companies).

1. Systems. Systems problems are those that are often caused by your company. These can be shipping and billing errors, disputes, misunderstandings, quality problems, or unissued credits.
   When you identify that a customer is not paying because of a Type II Systems problem, get all the facts and details from the customer. Then, arrange to solve the problem. In most cases, if you catch these problems in the early stages, they are easy to fix, and payment should be forthcoming quickly.

2. Financial. There are two subgroups of Type II Financial problems:
   1. Type II Financial Temporary. These are customers who are experiencing short-term financial problems (seasonal business, late payments from their customers, etc.). Work with these customers. Create payment arrangements with them to help them get caught up and encourage them to continue to purchase. The last thing you want to do is send them to the competition.

   2. Type II Financial Serious. These are customers who are experiencing chronic (and probably permanent) financial problems, and who have a 90% chance of going under. Don't extend any more credit to these customers. Move quickly to get out, and get what you can from them before anyone one else does. If possible, try to arrange to have already shipped product returned.