MYB147: How Small Businesses Can Stop Bad Debts and Protect Cash Flow
In this episode of the Max Your Business Podcast , hosts Ben Fewtrell and David Carlin tackle one of the most frustrating challenges small business owners face : unpaid invoices and bad debts. Responding to a listener question from Drew, Ben and David break down how overdue debts silently drain your cash flow and what you can do to prevent them from happening in the first place. Carrying bad debt isn't just about missing cash, it carries an opportunity cost that holds your business back from growing. Ben and David share practical strategies for chasing overdue accounts, setting clear terms upfront, and establishing a rock-solid collection system so you're not left playing banker for your clients. If you're sick of chasing unpaid bills or worried about how a dodgy client might impact your cash flow, this episode will give you the practical steps and mindset shifts needed to get paid on time, every time. Episode Highlights: 00:00 Welcome to the Max Your Business Podcast 01:16 Listener question from Drew: Bad debts, insurance, and cash flow recovery 02:01 Prevention vs cure: Why fixing collection systems stops debts from turning bad 04:09 When does an overdue invoice actually become a bad debt? 05:48 Taking a stand: Halting work and enforcing your payment terms 07:01 Spotting the warning signs early and grading your customers (A through D) 08:52 Practical debt collection: Why calling beats emailing and how rapport gets results 11:17 Setting up for success: Signed agreements, upfront deposits, and credit checks 16:12 Is trade credit insurance worth it, or should you just avoid high-risk clients? 18:52 Rebuilding your cash flow: Introducing the free Cash Flow Workbook 22:10 How cash flow forecasting gives you certainty (and saved one manager $11,000) 25:53 The reality of court judgments and why legal action is rarely a quick fix 28:06 Key KPIs to track and how to submit your questions Key Takeaways: Prevention Beats Cure: The most effective way to handle bad debts is to stop them before they start by setting strict payment terms, taking upfront deposits, and putting solid collection systems in place. Grade Your Clients: Focus your energy on 'A' and 'B' grade customers who respect your terms, and don't hesitate to halt work or part ways with chronic late-payers . Pick Up the Phone: Automated email reminders only go so far. A friendly, direct phone call builds rapport, uncovers cash flow issues early, and moves your invoice to the top of their payment pile. Forecast, Don't Guess: Your current bank balance doesn't tell the full story. A rolling 90-day cash flow forecast gives you true visibility, control, and peace of mind. 🚀 Get your free Cash Flow Workbook at maxmyprofit.com.au/cash and start taking complete control of your business cash flow today. Tune in to discover how to protect your business from unpaid bills and build a reliable cash flow system. Don't miss this episode, and don't forget to subscribe for more practical insights every week!





