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How Credit Affects Businesses
If you don’t have a credit policy for your business, then everyone will want to do business with you! While this may sound appealing at first, you won’t be doing yourself any favors. Extending credit to anyone and everyone without taking precautions, researching, and making sure a customer is creditworthy will leave you with a mountain of unpaid and past-due invoices on your books. Most new companies rely on their income more than veteran organizations because new businesses experience somewhat more sporadic income. New business owners are excited when they make a sale; they are finally getting paid for what they love to do! Or so they think. But what happens when you make that sale and then payment is not forthcoming? Now you are still doing what you love—but for free.
Remember—you always want to have a signed contract, agreement, and/or a signed credit application. If you’re making a sale for a large amount of money, you might want to get half or a large portion of the payment up front and the balance upon completion of the job or delivery of the item. You can certainly set up special terms and have specific contracts and agreements for these types of large purchases. Common terms when offering financing for a larger purchase are one-half down at the time of the order and the balance at the time of completion. You can also break up the final payment into two, three, or even four smaller payments; it’s certainly up to you. However, whatever you ...
