Extending Credit in Your Home Based Business
Whether or not you will be extending credit to your customers inyour home based business is a decision you will eventually haveto make. Every business owner will have to write off between 3and 5 percent of debt as bad, as long as debt is managedcorrectly. If you have just started your home based business,cashflow is very important, and so you do not want tonecessarily turn potential business away just because you thinkif you go extending credit you will not get paid. There ar...
...e waysto help you determine whether or not you should extend credit inyour home based business.Some home based business owners have a strict policy regardingup front payment or even pay upon delivery payments. However, ifyou want to keep your business competitive, extending credit isone way of increasing business. Extending credit, though, doesnot mean you do it willy-nilly to anybody who wants it. Afterall, some services or products are worth a lot of money, and notgetting paid can cost your business significantly.Therefore, you need to take some specific things into accountwhen you are considering extending credit to a client. First,take a look at the character of your client and their overallwillingness to pay debts. What is their history and yourexperience with their management? Is there a history of unpaiddebt or litigation? Taking a close look at the client can helpyou determine whether extending credit is in your business’sbest interest. While you are taking a closer look at the character of thecompany when determining whether or not you will be extendingcredit to that client, you should also take a close look at thefinancial capacity of the company. The company’s character tellsyou if the company will be willing to pay, but looking at thefinancial capacity will tell you if they are able to pay anydebt. When you are considering extending credit to a particularclient, finding out the character and financial capacity of theclient comes easiest from having them fill out a creditapplication and running a credit check. Beware of extendingcredit to those clients that balk at filling out a creditapplication, as most reputable clients will understand yourconcern. Also, double check credit references on the applicationbefore you go extending credit to your client.Your policy on extending credit is important here, as you needto know what to do with the information you get from the creditcheck. You need to know how much negative information makes youuncomfortable enough to not extend credit to that client, and ifyou will be requiring pre-payment in full or just partialpayment. Also, if you do decide on extending credit to theclient, then you need to make sure the payment terms are veryclear. Read the rest of the article here: Extending Credit inYour Home Based Business.Download the Free Quick Start Workbook (Free $97 Value!) andreceive valuable tips, strategies and techniques designed togrow a very successful Home Based Business.Copyright © Charles Fuchs is an established Six Figure Incomeearner and one of the top online marketer's. He specializes inhelping people start their very own Work atHome and Home Based Business on the internet.I grant permission to publish this article, electronically or inprint, as long as the bylines are included, with a live link,and the article is not changed in any way.
|
