Extending credit what you need to know

There is a chance that you will need to extend credit to your clients and customers at times so that you can get good business.Extending credit can sometimes be a good thing, because it can forge a bond of trust between you and your clients, which can ensure that your clients will use you in the future again!However, there are a lot of things that you should know if you decide to extend credit.Here are some helpful things to know:

• You don't need to extend credit to everyone:One of the important things that you should know is that, although you can extend credit offers to some clients, you are by no means required to extend credit to everyone that you work with.If you do this, you might put yourself out of business!Instead, you have the right to be selective in whom you extend credit out to.
• - Establish credit practices and parameters:With extending credit, you should make sure that you have an established manner of credit practices.It is especially important that you have these practices outlined before you extend credit for the first time - if you aren't sure of what you are doing, your client may feel like he can "walk all over you" in regards to paying you back.Make sure that your credit parameters are fair and follow the federal and state credit laws.However, you should also make sure that the stipulations are strict enough to make sure that your clients will actually pay your business as well.
• - Have a set procedure to follow for payment:No one likes to deal with a customer or client that doesn't pay up on their credit bill.You should make sure that you have a set procedure to follow for payment, especially if you have to deal with a client who does not pay up.For example, you could send overdue notices and a bill to the client first, which later could be followed by a demand letter.Lastly, you might need to send either a collection notice or a subpoena to appear in small claims court.Be sure that you give a small amount of time between each notification, in order to give your client a fair chance to pay the money that they owe you.
• - Remember that you are in charge:Something that you need to remember when extending credit is that you are in charge.It might be hard for you to collect money from a client because you don't want to offend them and lose their business altogether.However, if you let your customer "slide" and not pay what is owed to you, then it will become continually more difficult for you to get the customer to pay at all.Remember that you are the person in charge in the situation, and the customer is the person who does not have the advantage.Make sure that you also stay "in charge" by controlling your temper - do not harass or threaten your customer (unless you threaten to turn them into collections because you actually plan on doing so).Calmly speak to your customer when discussing when you will be paid, and avoid yelling or raising your voice at all costs.
• - Listen to your customer:There may be reasons why your customer is not paying the bill, and it could be a problem within your company.Remember that your customers and clients are important, realizing that there may be something that your business needs to fix before the customer will feel comfortable or ready to pay their bill.