The Ultimate Guide to Preventing Bad Debt: Strategy 3: Set Up an Accounts Receivable Warning System to Cut Bad Debt by 70%

In our last article, Part 2 of the Bad Debt Prevention series, we explored how to conduct effective financial due diligence on new customers. In this article, we will focus on how to establish an effective accounts receivable warning system so you can spot overdue payments early and take prompt action to reduce bad debt losses by up to 70%.  

Waiting passively for payments is risky. A well-designed warning system includes:

• Red Alert (30 days overdue): Automatic email and SMS reminders; sales should immediately follow up by phone. 
• Orange Alert (45 days overdue): Finance management steps in for direct intervention and reviews the customer’s financial health. 
• Black Alert (60 days overdue): Stop all supply/services immediately and launch professional collection — don’t hesitate here!

Case study:

One electronics client used this system and referred an HK$1.5 million overdue account at the 60-day mark. Our quick action recovered 100% within 14 days. The client said, “If we had waited another month, the debtor would have liquidated, and we would have lost everything.”

Protect Your Hard-Earned Revenue with Professional Debt Collection
 
Preventing bad debt is a race against time. By recognizing risk signs, performing financial checks, and setting up alert systems, you can eliminate up to 80% of bad debt risks.
 
But when bad debts do occur, the fastest and most effective solution is to hand them over to professionals. At RMS Hong Kong, we offer:
 
✅ Advanced debtor asset investigation tools
✅ Expertise in legal claims and negotiation
✅ High success rates with fair fees

Take action today: If your accounts receivable are showing warning signs, contact us now for a free debt assessment. Let us help you safeguard every dollar earned through your hard work.

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