I know as i write this i am setting myself up for a fail, lol (touchwood)- but this has been my philosophy in 12 years of running my own Ltd Co and 15 years of running businesses inside a PLC.
1. Choose your customers carefully, for Companies i used credit referencing in the early days, for domestic (very small amount) usually referrals from other clients.
2. Use spider senses during the job, any sign of an issue deal with it there and then
3. Taking over an un-finished job is a major flag, but i have done it, start a very small amount first , then invoice to see if payments have been the issue.
4. Prompt payers jump my work queue
5. Clients i have to chase for payment, very rarely now, go to the back.
6. Difficult clients get dropped altogether, this may be more to do with working practices, than payment, you will know if a client is difficult, lol
Remember as soon as you answer the phone its your time and its your credit you are giving, if you leave the house to quote, its credit ! , if you start the job without payment, its credit etc etc - In other words recognise that your are giving credit and recognise it as such.
Don't get me wrong, my terms are full payment on completion of job within 30days of invoice, i do occasionally request large material payments be made when the goods land on clients premises and very occasionally i request payment for materials prior to order, however this is rare.
In 12 years the only bad debt has been £90 inc VAT - Its was one of these cold calls from middle men to attend a fault at the clients premises. I agreed to go, fully expecting not to be paid by said middleman, met the client, explained before i started work that i am not expecting to be paid, he agreed to pay me if the middleman did not. I appreciated the offer, but did not take it up. I diagnosed a faulty pump which was going to be circa £500, agreed with client to cut out the middleman and this client has been one of my best for years, since. Invoice middleman for £90, Chased up the original call out from middleman as they had charged client £180 via credit card, got fobbed off, ha ha. Shortly after, middleman went into voluntary liquidation, the administrator included me as a creditor, lol and i got my hands on the total list of creditors, it was so sad to see so many other trades were down many thousands of pounds. I dodged a bullet, treated it as marketing as they did at least introduce me to a very good client.... lol