|
It is time consuming, frustrating and often costly to sell on credit. So you
should at least decide on which terms you will give credit.
Should I grant credit?
Whether to grant credit, and the terms of
possible credit, depends on your agreement with the customer and, to some
extent, on trade customs. Many companies grant a 30 days credit or "invoice
month + 30 days". Sometimes, credit is a competitive parameter similar to
for instance price.
The longer the riskier
Bear in mind, however, that the longer credit you grant the greater the risk of
ending up with no payment at all. There is always an element of risk connected
to granting credit.
Exact date
If you do not have a specific agreement with your customer it is often an
adequate measure to state "net cash" or "net 8 days" on your
invoice thus signalling that you do not generally grant credit.
You can state a due date – for example 25th April - if it is two weeks
ahead. This way your customer knows exactly when to pay.
Month´s non-payment
You can also choose to just await the customer´s settling of the invoice
not requesting payment until after a month´s non-payment.
Even if you by doing so you risk granting a month´s credit, you avoid
precluding yourself from requesting payment until a due date stated on the
invoice has been exceeded considerably (for instance net 30 days exceeded by 2
weeks = 1½ months´ credit).
Requesting payment
If you have stated an 8 days´ credit and the customer has still not paid
after 30 days you should not hesitate to request payment. Or do it earlier, if
it seems reasonable.
Requesting payment can be done by means of phone, letter or in a different
way. This is entirely up to you and is mostly a practical matter.
Check for payment
If you choose to sell on credit you must be sure to look through the debtor
files at regular intervals and ensure that people have paid what they owe you.
Selling your products or services you should remember to state clearly on
which terms you want your customer to pay.
- Go to next
business issue: Financing Operations
Download free templates
- Download templates to help your start-up
Copyright © 2009 Dynamic Business Plan 07-02-2012
|
