Give Them Credit

Before you extend credit, make your credit policies crystal clear to customers.

First, use a standard credit application form for every customer. The application should list the company's legal name, the name it operates under and the principals' names. It also should provide complete contact information, including who has the authority to make purchases and who to call about invoices; both physical and mailing addresses; phone, fax and e-mail numbers; and any special instructions required.

Next, either on the application or on another form, clearly state your terms and the consequences for failing to meet them. This could include late fees, legal fees if action becomes necessary and where any lawsuit would be filed.

Of course, make sure the customer signs the document. And don't forget the obvious--ask for and check credit references.

Excerpted from Get Smart: 365 Tips To Boost Your Entrepreneurial IQ