For any business, cash flow is everything as it can make or break the whole operation. But it is also perfectly normal to extend credit to customers to raise sales and generate revenues for the company. However, there are always general rules on extending credit to customers and here are a few tips that you need to remember:
- Before extending credit to customers, try to do a background check. If you can’t hire a company to do background check, you may want to ask common friends or some people who know the customer.
- When extending debt for the first time to a customer, look for some signs on how he will comply with the payment terms. If he breaks the terms of repayment, pays late, postpones payment or gives excuses, do not extend another credit to the customer.
- Make sure to have all the contact details of the customer and confirm these contact details. Take note of the address, all his phone numbers and make sure these are accurate and that he is present, and not hiding, whenever you call him.
- Be wary of how the customer reacts to your products and services. If he is constantly complaining or unsatisfied, yet, wants to obtain these products on credit, be careful as eventually there is more chance that he will refuse to pay and provide alibis on why he doesn’t want to pay.
Doing extra research and being alert on these signs can help save any business from the trouble of running after delinquent customers in the future.
