My friend said to me you don't see people when everything go alright. You tell a lot more about people when things went wrong or you have no "use" to him / her anymore.

Recently, I got a couple of invoice I couldn't get the money back because I thought "friend" will not cheat you and it was all ok for a long time.

1) customer closed the business

2) customer changed to another supplier (and so, he / she doesn't need your things anymore, it means you have no use)

I think bad debt happens everywhere: retail shops, friends or banks itself. In business, you hardly could prevent the bad debt totally especially with your distributors / big customers where they generate a lot of sales. However, how could we mininise it ?

1) Make invoice in a shorter period of time (etc, if you use to send invoice every month, then you it every 2 weeks)

2) If outstanding balance reaches certain level, chase the money first till you give out more.

3) Have measures in places where you can put some damage to him / her ( lilke me, I sell software where I can disactivate his / her license). I lose money, but sure he will have to buy a new one or put your case on forum where he / she makes business, so others could know.

Anyway, having said that, I hardly have any bad debts and most people are actually more trustful than I imagine.