Offering credit to your customers is a fact of life for businesses, and there are definitely standards to maintain. Recent articles on Business News Daily and All Business offer practical tips on how to best establish a credit policy for your customers. We’d like to share a few of these techniques to keep in mind, especially if you decide to take this opportunity to audit your current policies.
Check your cash flow first
It’s important before you start a credit policy that you are acutely aware of how much money is going in and leaving your business on a regular basis. To that end, All Business suggests you analyze your cash flow to meet capital as well as daily expenses, monitoring sales on a daily basis until you have a comfortable average on which to base your credit policies.
Make sure to have goals in mind
The policy you set up should have a least a few clear objectives defined from the outset. Business News Daily suggests that you make sure the policy:
- Clearly qualifies or disqualifies clients for credit
- Defines payment terms for those who do qualify
- Features a maximum limit on credit
- Gives the full details on how your company intends to collect debt
Find the true middle ground
All Business suggests that you tailor your credit policy so it allows for identifying potential risks but isn’t so restrictive that you aren’t able to extend credit to financially sound customers.
Be very clear on installment plans
Having a policy where installment plans are a possibility is something that should be a part of your business, especially if B2B is your base. Business News Daily points out that having an installment plan open may actually decrease chances of unpaid debt, since it makes the payment process easier. Plus, it boosts your own cash flow, maybe at a time when you’d really need it.
Make sure the processing is a part of the document
This is one policy detail that should not be overlooked. According to Business News Daily, you should outline how your company will process its applications and look at the credit history before it’s approved. Be sure to detail any factors that may result in lower credit than the maximum for those who apply. It’s also a good idea to spell out any changes to an account that will affect the current credit.
No matter how you decide to establish credit with a customer, it’s always best to be clear and concise about your policies. In turn, this transparency can lead to instilling trust in your customer base.
Treating everyone with compassion and empathy starts with the customer service relationship, and policies can strengthen it. Those twin pillars are also major parts of what we do at ARO. We are able to track and reconcile customer debt with the personal touch you require to create a solid customer experience. Find out more about what we have to offer businesses at our website.
