Credit Policy for businesses and how to extend credit and manage credit risk

A question I am asked often by business owners or entrepreneurs who are deciding to start a busienss is, "How do I create a credit policy, and why do I need one?" 

A credit policy falls into the same category as a business plan or marketing plan.  If you don't have a business plan, you will not be able to get a loan to start your business.  If you don't have a marketing plan, you will not have media exposure or get the word out about your business.  If you don't have a credit policy, you will not be incontrol of your cash flow or the success of your business.

If you create a credit policy for your business, you can include the policy in your business plan, just as you do with a marketing plan.  Then the bank will see that you are serious about your business, you know what you are going to do to maintain and control your cash flow and how you will be making money to pay them back.  If you include a credit policy in your business plan, you have a much better chance of having your loan approved.

I have written many credit policies for many businesses, large, small, service businesses, and retail businesses.  One important thing to remember, every credit policy is different.  Just like your marketing plan, your credit policy has to reflect your customer service procedures, your product and how you want your cash flow to flow.  I have written a book called "Become the Squeaky Wheel, a Credit & Collections Guide for Everyone" and include in that book examples of actual credit polices that I have written and that are still being used by those companies.  There are many things to know when you create your policy, including laws in your state and the states you are doing business in.  You can check out my book at http://www.michelledunn.com/book_squeakywheel.html

I am going to  post tips and provide tools that will help people create and enforce their credit policies.  I welcome any questions anyone has about credit policies, or debt collection. 

Please check back to my blog often for helpful information and answers to your questions.  Also, feel free to email me anytime at michelle@michelledunn.com.