You Owe It To Yourself
Set up a credit strategy to make sure the check
is in the mail.
By Jacquelyn Lynn
You've developed an irresistible product, come up with an
effective marketing plan, and you're ready to go. But wait!
Though making the sale is great, the process isn't complete
until you actually get paid.
Whenever a sale does not include an immediate cash payment, you
are extending credit; whenever you extend credit, you are taking a
financial risk. However, you can reduce that risk by developing and
consistently applying sound credit strategies before you
have a problem.
Begin with an understanding of the difference between consumer
and commercial credit. Generally, if you extend credit to
individuals, it's considered consumer credit; if your customers
are other businesses, it's commercial credit. In most cases,
checking credit and collecting from a commercial account is easier
than from a consumer account. If your customers are individuals and
you don't want to take the credit risk yourself, apply for
credit card merchant status so you can accept various bank credit
cards. Your banker can help with this process.
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Of course, even accepting credit cards doesn't guarantee
payment, because the customer has the right to dispute charges. Be
sure you are clear on all your rights and responsibilities to both
the consumer and the credit card companies, and implement
procedures to ensure that each transaction is handled according to
the appropriate policy.
Jacquelyn Lynn is a business writer who has specialized in
marketing and management issues for more than a decade. She lives
and works in Winter Park, Florida.
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