Your business can’t survive if you don’t have enough money coming in to pay your bills. Having to spend time chasing down money can be a huge expense you just can’t afford. Taking the time to put the proper credit policies and procedures in place to ensure you get what you deserve will save you a lot of time and hassle in the long run.
Having a good credit policy within your business is one of the most important and vital aspects of your company, it is one of the best ways to limit your cash flow risk. Without a credit policy there is no guideline to follow, no rules and regulations, it’s chaotic.
Your credit policies can help you and your fellow co-workers to decide who you will extend credit to and how, the maximum amount you will allow and the payment arrangements that you will put into place. It also helps when it is time to start collecting on the credit that has been extended out as well as paint a clear and understandable picture for the customers and clients that are obtaining the credit. There is no room for surprises down the road as long as you have a policy established.
In addition to allowing for credit you should implement a few others things, such as certain workable time frames for the customers to pay you back, an interest rate that is not outrageous but affordable, and more than one option for your customers on paying back their credit to you such as credit cards, checks, cashiers checks, money orders and cash. This way there is no room for excuses as to why they can not pay you back