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

Now is the time you need to start thinking about what you will do when your customers run into hard times and are unable to pay you.

Do you have a plan in place? How will you handle this?  

There are many things you can do to protect your business from non-paying customers.  Here are three popular steps business owners take to prevent having to carry large amounts of money on their accounts receivables:

1. You can revoke their credit; even temporarily until they are current and prove themselves for a while.
2. You can put their account "on hold" until they pay off their balance, you could put them on COD until the balance is paid and collect $25 or more on each additional order that they pay for that you can put towards their past due balance.
3. Visit them, call them or send a letter. In that order. Personal visits are the most effective and quickest way to get paid. Calling someone is the second most effective way to get paid and letters can be effective but sometimes are ignored and thrown in the trash.