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Tips before you give credit to a customer
No CommentsSuppose the situation where a client wants us to buy something, but he says that you can only pay us within a month.
Accepting the request of the customer and give credit, may be a way to increase our sales and to create or maintain a business relationship with that customer.
However, accepting credit can give significant problems of liquidity, or the risk that the client does not pay on the agreed date or, even, we get to pay.
In the case of large companies, they have a credit and collections department that allows them to efficiently manage credit and collections thereof.
But in the case of small companies or businesses, the decision to give credit to a customer is not something we can leave it to intuition, but a decision we evaluate well.
Let’s look at some tips that should take before deciding to give credit to a customer:
it is first necessary to assess whether we are able to grant credit. If, for example, recently we have started our company and we are short of cash, may not be very convenient to sell even to credit.
While the latter is to assess the client requesting the credit, which includes assessing their time in the market, business experience, credit history, your ability to pay, and so on. Information can be accessed through government agencies, credit bureaus, vendors, customer, and the same customer.is necessary to evaluate the client well, however, the depth of the assessment will depend on the confidence we have in the client and the loan amount. For example, for a single sale of a few dollars, not worth spending so much time and money researching the customer.
in case after making our assessment we are still not convinced of the client’s ability to pay, we must consider that there is always the possibility of asking some sort of guarantee.
once we have agreed to give credit to a customer, you must specify clearly the conditions of the loan and, if possible, you should sign a contract as well as including debt and deadlines, including penalties for late payments.
we avoid possible credit sales, and if at some point we do not have enough liquidity to accept grant credit, we should be frank and kindly communicate the problem to customer who requests it.Finally, a council relates to the granting of credit is to have a program or software that allows us to store information and customer history, and includes a detailed record of the behavior of our customers to a credit, for example, how long it takes pay, how often fell behind in payments, etc..
So that we can better manage our credit and collections, and, above all, we have information that will help us better assess our clients when we subsequently apply for a new loan.
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