How to take advantage of extending customers credit

Giving your customers that option of paying with credit can bring in a bigger customer base, but it can also be the death of many businesses.There are some ways that you can take advantage of extending customers credit, you just have to be smart about it.

A great idea for your business is to have the option of accepting major credit cards.Through your bank or through a merchant credit card processing company you can get the equipment you need.This gives customers the convenience of using plastic in your store, but you don't have to be the one the offers them the credit.

If you want to extend customers credit, you need to know that it is okay to say no to some customers.You should run a credit check as part of the application process so that you know if they are in good standing with their credit.If you find that they have a low credit score, they may have trouble paying you back and allowing them the credit probably isn't the best idea.

When you do find a good credit score make sure that you have adequate information on their application.You should know that they are who they say they are and that you can find them later if you have problems with their payments.

You should have very detailed terms and conditions with your credit.It should spell out exactly when their money is due and what the penalties are for not paying.The customers need to be given a copy of these so that they have no excuse if they don't comply.

You should be keeping very close track of the credit you have given out and when money is due.You should also have clear records for when payments are made and how much the payment received was.If you aren't keeping track then you may forget about accounts and loose that money.You may also have problems if you don't record a payment and the customer has to dispute it.

A great way to get timely payments is to offer incentives for paying on time, or early.If they know that they will pay 10% less if they pay before a certain date then that may motivate them to make prompt payments.If they know that late payments are going to hold fees or fines then they may also find some motivation.

Send out notices and statements so that customers are always current on how much they owe and when it is due.Make sure that a statement gets out within 30 days of the credit extension and the first payment should be due about then too.If the payment is late then you should inform the customer right away, statistics show that accounts that are more than 60 days late almost never get paid back.You should be pushing for your money by 60 days.

For a security you should ask for a name a telephone number or address of a close relative that doesn't live with them.This gives you someone to turn to if you are having trouble locating the customer.They won't be responsible for the payment, but they may be able to direct to where you can get it.

If you are very careful about whom you give credit to and how much you allow, then you can make credit work for you.There are many laws and regulations regarding credit and doing credit checks. Make sure that you know what you are allowed to do and what you need to be careful about.