In a Pinch Better safe than sorry, right? Here's how to safeguard your business from customers' credit woes.
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As a company that connects home sellers with reputable investors, Southlake, Texas-based 1-800-CashOffer was hit by the economic slowdown earlier than other companies. CEO Jeremy Brandt previously extended credit terms of 15 or 30 days to some of his business customers, but when the housing market began to nosedive, he saw trouble on the horizon. "Our customers were seeing slowdowns in their businesses, which ultimately led to a slowdown in our business as [customers] took longer and longer to pay," says Brandt, 29, who opted to stop extending credit across the board. "We decided to take the hard-line approach that everything is paid in advance for services. That way we don't get stuck holding the bag."
Not all business owners will go in this direction, though, and some industries may not even have the option. But in a stumbling economy, all entrepreneurs need to think about tightening the reins and being more careful about the kinds of credit terms they decide to extend--and to whom.