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

If your customer’s owe you money you are lending them more money than you realize!

The November issue of Inc. Magazine has a great article in this month by Norm Brodsky where he talks about your customers taking to long to pay you and how it can cost you a lot.

If you bill your customers for ANYTHING, you need to take action right now and look at your accounts receivables. I cannot stress enough how important this is for every business owner to do NOW.

When credit and cash are tight, look to your receivables for money.  This money that is owed to you is equivalent to “loans” you have lent out and now you need that money.  Is it taking you more time and effort to collect your money than it should? Is having money that is not paid causing you stress or anxiety?  Do you need to apply pressure to get paid or maybe even fire some customers?  

It is very easy for businesses to overlook the money that is owed to them when business is good and cash is flowing, but beware.  Even if you are paying your bills on time and have plenty of money left over, remember that won’t last.  Remember that with any money sitting in your accounts receivables, you are losing money. 

Those customers literally take money out of your pocket. Is that what you want for yourself and your business? I think not.

Stay ahead of the game, print out your accounts receivable listing today, highlight anything over 120 days and over 90 days and work on those accounts diligently until they are paid or cleared up, either by writing them off and firing the customer, or repossessing your product or getting paid.  Then work on anything over 60 days and continue that until your receeivables are cleaned up.

You will have more money and you will make more money.