Many people are under the impression that selling goods on credit is a double-edged sword, but this doesn’t have to be the case. You can enjoy the benefits of watching your business grow by offering your customers credit while resting assured that risk of late or unpaid debts won’t negatively impact your business. Read on to find out how.
Watch your customer base grow with credit.
Offering credit to your customers as a means of payment means that they are not burdened with high upfront payments from the get-go. Many businesses cannot afford to make large cash payments in one hit, so offering credit as an alternative will allow them to invest in your product. This means a stronger customer relationship based on goodwill, not to mention many more customer referrals! Offering credit makes your product easily accessible to a range of customers. These customers will be less concerned with the price of your product, and more concerned with coming back to buy again, knowing they aren’t burdened with the need to pay for it immediately.
Build a better relationship with your bank
Being able to offer credit to your customers, and prove that this credit will be paid back within monitored time frames, will establish a good reputation with your bank. This means that your business will be more likely to receive loans when they are requested. A good credit rating will give you access to a variety of services unattainable to other businesses who do not offer credit.
Avoiding risk with Trade Credit Insurance
If you’re offering credit to your customers, trade credit insurance is a must. Late or unpaid debts can pose dire risks to your business, especially if you have only a handful of large clients that you rely on for payment. Transfer this risk to an insurance company by investing in trade credit insurance. You can rest assured that your business will not be impacted if one of your customers goes into liquidation, or fails to pay a large sum of credit.
You can vet your customers before offering them credit
Don’t forget that if the stakes are high, you can choose to vet your customers’ credit ratings before accepting them for credit payments. This may be necessary if you operate a specialised business with limited products worth a large sum. Make sure that every customer signs and agrees to all terms and conditions outlined in their credit agreement.
Keeping detailed records
All businesses, regardless of how big or small, should be sure to keep detailed records of all payments received and ongoing. This will ensure that if any bad debts occur, everything will be in writing and information can easily be accessed by your insurance broker and lawyers, to ensure that your company is not held liable.