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