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Do you want better controls on how you extend credit and want to know what makes a good
credit policy? A good credit policy dictates the terms in which you are going to extend
credit, who you aregoing to extend it to to, how soon you expect to be paid, the penalties
that will incur for notpaying on time, and the manner in which you will treat those who
do not pay at all. Make sure you gather complete information on your customer, and evaluate
their ability to pay.If the customer’s information seems unstable tighten your terms by requiring
them to pay up front or make a deposit.Educate your customer
on your credit terms by telling them what your expectations are on
receiving payment.Send your billing statement as soon as possible rather than wait until
the end of the month which only slows down your cash flow.The shorter
the terms the sooner you will get paid, so 21 day terms get you paid faster than 30 day
terms. Assess interest if the customer does not pay within the agreed upon terms, but
be sure to check your state laws to make sure you are not charging
more than what is allowed.Follow-up on past due accounts with letters and telephone calls.If
you do not receive payment after 90-120 days send the account to a professional collection
agency.