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

First there was Black Friday and now there is Cyber Monday or as it should be called Black Get into Debt Day.  Consumers everywhere begin spending money on Black Friday, the day after Thanksgiving, and continuing on Cyber Monday and then up until Christmas Eve. 

Why do they call it “black” Friday? Black seems like such a dark, ominous way to put it and has been used to describe disastrous days in financial markets.  It is my understanding that the ‘black” in Black Friday comes from a day of stock market catastrophe.  Originally, September 24, 1869 was deemed Black Friday.  This crash was started by gold speculators who tried to corner the gold market.  This attempt failed and the gold market collapsed, causing the stock market to plummet.  Another “black” day was Black Tuesday, October 29, 1929 when the stock market fell signaling the start of the Great Depression.  Additionally the largest one day drop in the stock market occurred on Black Monday, October 19, 1987 when the Dow Jones Industrial Average fell more than 22%.

I don’t think this is what retailers want you to think about when they have a Black Friday or Cyber Monday sale. Especially when you look at our economy today and where it might be headed.  The day after Thanksgiving in the USA is when retailers generally see a surge in sales and consider this to be the start of holiday shopping and they hope to have enough sales to put them “in the black” which is an accounting expression used to describe making a profit or not, such as being in the “red” or in the “black”.

What does this have to do with debt collection or your business? If you are a business owner you are probably already making money based on these holiday sales.  How many of those sales were actual cash sales? How many were charged to credit? How many people owe you money today and how much compared to last week? Do you think you will get paid? How are you making sure you will get paid, in full and on time?

Black sale days affect every business, make sure you are protecting your best interests, while making sales and also while getting paid.