Credit for customers has always been a big part of the business world & due to the current economic climate, more individuals are in need of it. There is then something of the expectation from those we do business with that we will extend credit & offer reasonable terms, just as in turn we expect our suppliers to raise credit to us.
However, just because we empathize with others in the business community & are aware of the need to offer credit to customers, this does not mean that we should leave ourselves without protection; business is far from risk-free, and although extending credit is commercially the sound move it is prudent to be picky about who you offer it to.
Before Offering Credits –
- Check out your competition. You might find that your competitors are not providing credit accelerated insight platforms to their customers; it means that you can have a great commercial benefit by extending credit terms or that you can choose to refrain from providing the credit without disadvantage.
- Not every customer is equal. There is nothing wrong with providing credit to all clienteles but varying terms depending on each one’s trading history; all such customers very new to the business should perhaps expect shorter times & lower sums.
- Check customers’ income levels. When first offering the credit to the customer, proof of income should be taken; ask for accounts information to substantiate figures.
- Check customers’ credit history. Easy enough to check & good indication of any previous issues. If you have a bookkeeper and/or accounts department, assign the individual to carry out & record tasks routinely.
- Obtain trade references. Exploring others who have done business in the past with your customer can be a useful way to establish the payment habits, and turning up any past issues, you may find out other helpful information about how the customer pays.
For small business owners, one of the hardest issues to handle is not being paid for your product or service. If it has ever occurred to you, it is one of those things you never want to have happen again. The first and foremost thing you can do is to thoroughly check your credit before you provide credits. Before you give anyone credit, you should make them complete a credit application, perform credit checks, retail consumer financing, & get at least two trade references. Most of the individuals & companies understand the need for this information & will gladly give it to you. Always remember that providing credit is a privilege & not a right, be firm on this fact. One must know that bringing retail support will help in uplifting the business to the greatest possible level. This is why a person is suggested that maintaining good relations with the client is good with the right software support.
You have to send an invoice out the day which you complete service & send goods. Always try to send the copy with products & to accounts payable departments to ensure they have received it. Your shipping ‘Bill of Lading’ should have all shipping information, product codes & should include a copy of the invoice. Ensure that you get the name of individuals whose account is payable. If you have your company fill out the credit application form, you should have that individual’s name already. You may speak to several individuals & get varying responses, but if you speak to the same person each time & keep notes of your conversations, they will be accountable for payment.
You have to call & ask about payment on the day that it is due. At this point, there is no problem, so there is no need to be violent. What you are doing is encouraging the slow payer to pay on time. The conversation can start with the quality assurance questions like, did they get the product on time, was the work done to your satisfaction & let them know certain steps you might have taken to assure they were satisfied. If all is well, you can informally ask when you can expect payment. By making conversation about them & their needs, it will be easier to get what you need.
The concluding way to encourage the individuals to make the payment on time, or early, is to provide them with a discount. You can offer a small but noteworthy discount for early settlement. Before giving any discounts, make sure it is something you can afford. You can place this offer on the original invoice & on any shipping papers. Providing credit can be a good way for the business to get orders for their goods or services, but only when done the right way. With the information in this article, you should be able to safely offer credit to customers, knowing that you will be paid on time, if not early.