A BUSINESS owner could wonder why they need a credit policy but the answer to that is very simple. It is because the policy will protect the business in case the customers are not willing to pay. The economy is facing recession and times are hard. It therefore follows that even customers who previously paid promptly start struggling in their payments; and those who already had difficulties further lag behind. In order to keep the customers, a business owner needs to create a credit policy. This ensures that one is paid for the product or services and they continue being in business…
Begin by looking at the accounts report and writing down the names of those who owe your business money; write down the amounts and the overdue period. Those accounts that are overdue should be given priority. They should be reminded of their late payments through all means possible, calls and emails among others. Customers should not charge anything until their credit is checked. It helps in minimizing the risks and will help customers take your business seriously.
Reminding customers who do not pay up helps the customers be aware of the fact that their debts have to be paid right away. It also helps all debts get paid.
The thought that could be disturbing is what the business owner is supposed to do when customers do not pay on time or at all. Some do not respond to calls or emails and leave you confused on what the next step should be.
When making a credit policy, write down the things or actions you want to be taken when a customer’s debt is overdue. They may include phone calls or other friendly reminders. Customers often give lame excuses so one should be ready for them unless you want to be caught off guard. Be ready with the next course of action; be persistent that the bill must be paid. Verify for them all the details so that when they ask about it the next time you will know that they are not serious and you can take another action on them.
Credit policy is a blueprint usually used by many businesses so that they can decide if they can give goods or services on credit to their customers. The main goal of having a credit policy is to eliminate the risk of having to give customers goods on credit yet they may not be able to pay. In large businesses, it can get very formal with the customers having to bring documents, having to apply for the credit while some may also have credit checks. Smaller businesses are usually informal in their credit facilities. Most people who own businesses rely on their instincts to decide if they will give the credit or not.
A credit policy should not be very strict because it could put off potential customers. This is in turn could lead to slowing in the number of sales, eventually decreasing cash flow sizably.