What is the best way to tell a customer their order is on hold?

Answer: If you are asking how the information should be transmitted, the answer is by phone. A fax is too impersonal; a letter takes too long; and arranging for the salesperson to deliver the news may result in a 'spin' being placed on the news. If you are asking how to tell the customer - the answer is that you should give your customer the facts, and do so in a non-threatening manner without offering any value judgments, or apologies, or opinions. An example of all three would be the following statement:

"Obviously you are incapable of making a commitment you are able to keep, but I am sorry to have to put your account on hold, but my guess is that you would have continued to pay slow until eventually you either went out of business or filed for bankruptcy protection."