Extending Credit in Your Home Based Business

Whether or not you will be extending credit to your customers in your home based business is a decision you will eventually have to make. Every business owner will have to write off between 3 and 5 percent of debt as bad, as long as debt is managed correctly. If you have just started your home based business, cashflow is very important, and so you do not want to necessarily turn potential business away just because you think if you go extending credit you will not get paid. There are ways to help you determine whether or not you should extend credit in your home based business. Some home based business owners have a strict policy regarding up front payment or even pay upon delivery payments. However, if you want to keep your business competitive, extending credit is one way of increasing business. Extending credit, though, does not mean you do it willy-nilly to anybody who wants it. After all, some services or products are worth a lot of money, and not getting paid can cost your business significantly. Therefore, you need to take some specific things into account when you are considering extending credit to a client. First, take a look at the character of your client and their overall willingness to pay debts. What is their history and your experience with their management? Is there a history of unpaid debt or litigation? Taking a close look at the client can help you determine whether extending credit is in your business