Dear Norm,

I have a friend who does pickups and deliveries for air-freight companies. He has a problem that I've had to deal with in my own business. The problem has to do with one of his customers, who has been taking longer and longer to pay. In the beginning, my friend would be paid in 14 days. As the months went by, two weeks became three, three became four, and so on. Now these people are seven weeks behind and just got evicted from their second warehouse in six months for nonpayment of rent. It looks as though my friend is going to be out a good sum of money. My question is: How long should you wait before cutting bait with a firm that is going down the tubes?

--Phil Weisberger, owner, Phil Weisberger Delivery, Indianapolis

Sooner or later, every business faces this dilemma. A customer is obviously in trouble, and you're forced to decide whether to continue doing business with the company. Pull the plug, you fear, and your bill immediately goes to the bottom of the customer's pile of payables, and you'll never get another dime. Then again, if you ignore the problem, the amount of money you're owed--and the risk of an even larger loss--will keep growing.

In such situations, I've found it's best to leave early. When a customer repeatedly fails to honor a commitment, the odds are that the relationship is going to end badly. If I'm supposed to be paid in, say, 14 days and no check arrives, I call to find out what the problem is. The customer may have a legitimate reason for the delay. We then settle on a new date. If the check again doesn't arrive on time, that's it. I won't go on supplying services to a customer who has twice made a promise and not kept it.

Unfortunately, that advice was too late for Phil Weisberger's friend. His late payer was all but out of business. It had closed operations around the country, keeping only its headquarters in Las Vegas open, and was scrambling to collect its outstanding receivables. I didn't hold out much hope that Phil's friend would be able to retrieve all the money he was owed, but I suggested a two-step process that might help him get some of it. I told him to begin by sending letters to the customer's customers, asking them not to pay the receivables and explaining that he was being stiffed. At the same time, I suggested he file a claim in small-claims court. If he wins there--as I suspect he would--he can use the judgment to collect directly from the customer's customers. And even if he loses, he'll have the satisfaction of being a thorn in his deadbeat customer's side.