To Your Credit
by June Campbell
When a customer requests credit, do you:
For those of you who selected the latter, here's some tips from an entrepreneur with over 35 years experience in credit and collections. Ian A. Love, owner of Alexian Accounts Receivable Services, offers the following tips.
1. Don't give credit until you can answer the following questions to your satisfaction:
-- Who exactly is your client?
2. When you develop a credit policy, decide on net monthly terms and base it upon the industry that you are in.
3. Run a credit check on a new customer before giving credit. Get information from a Credit Bureau and ask for trade references. Be on the look out for suppliers who aren't listed as references. They may have a study to tell that you need to hear.
4. Chase the dollar, not the sale. For example, suppose your salesperson sells someone $100,000 worth of merchandise on credit. The salesperson may consider only the profit from the sale. But if the customer goes bankrupt, you stand to lose not only the profit but the expenditures that went into the project as well, to say nothing of the time your credit manager will spend trying to collect before the bankruptcy takes place. Don't be swayed by the lure of the profit without doing your homework.
5. Look for reasons to say, "yes." " All to often, businesses make a quick "no" decision re granting credit. Then they feel uncomfortable and give in to the customer's persuasive arguments. Keep looking until you find a concrete reason why you should say "yes," and don't grant credit until you find it. While looking for the reason to say "yes," you might also discover the reason to say "no."
6. Keep close to the sales and marketing people. They have to fully understand your credit policy and may have concerns or suggestions to contribute.
7. Develop a procedure manual that you will share with the accountant, the sales department, management, and sales and marketing. Make sure that each department understands what each other's role is in processing the sale. Cover very single step from opening a new account to when you make your first collection call to when you get more forceful in your activities, to when to go through small claims court, etc. The whole idea is to get the decision- making points of the journey outlined in an orderly manner and make to good decisions rather than reactionary decisions.Interested in publishing this article in your ezine, website or print publication? This article is available for your use provided you include the info box below and use a live, DO FOLLOW link to this site.
How to Write Business Plans, Business Proposals, JV Contracts, More!
No-cost ebook "Beginners Guide to Ecommerce".
Business Writing by Nightcats Multimedia Productions