A cash flow problem is almost always the reason a customer requests a payment plan. The big question is; how do you determine if that’s the best course of action for you and your business?

Before you can make that determination, you need to understand your customer’s need for the request. Find out the backstory. What are the circumstances surrounding the request? Write down as many details as your customer is willing to offer.

The next step is to validate the claims. Is your customer telling you the truth?

Talk to other creditors to see if they are hearing the same things you are. Try looking at your customer’s last 6 months worth of Merchant Statements to see if there’s been a decline in credit card traffic. You might even try talking to their bank to see if a check would clear if they were to issue you one.

A payment plan isn’t the best solution to account that is past due, but it’s certainly better than not being paid anything at all. If your customer’s story checks out, working with him in any way you can (within reason) may help you keep a good customer who is simply going through a tough time and in the long run, may be the most profitable option.

Payment plans are one options that may serve you well.