This is the third in our series of credit control top tips. Click the links below to view our first two tips:
Having done your homework about your customer, and perhaps explored the idea of getting a personal guarantee, you can turn your attention to setting and administering an upper credit limit for your customer.
Credit should be a privilege for your client and not a right; don’t be lured by the promise of new business into giving more credit than you can risk. Don’t be afraid to say ‘No’ or ask for money up-front; if the customer wants to do business with you and wants to buy your products or services, they will accept and respect that this is how you do business.
Once you have set a sensible credit limit, it’s important to ensure that your sales and business development teams know what that limit is and administered effectively to ensure that the limit is properly controlled.
You can always review your relationship as it continues to grow, but you should maintain control and monitor the situation as the relationship develops. Our top tips therefore include:
At the end of the day, the importance to you to manage financial risk to your business should outweigh the need to extend credit to your customer. In many relationships, there is, of course, a symbiosis and reciprocity which must be considered if you are both to succeed but managing that risk will be key to your own business’ prosperity.
Our experienced team would be happy to help with any queries which you may have and would be happy to discuss how we can help you in designing your credit control systems.