You appreciate your clients. After all, other Georgia business owners may have many choices within your industry, but they choose to come back to your business for their needs. This demonstrates their satisfaction in your product or service and their trust in your standards.
You demonstrate your trust in your commercial clients as well. One important way you do that is to extend credit. Offering commercial credit accounts is a smart way to build strong relationships with your clients. Unfortunately, not every customer lives up to the trust you place in them. The problem is that you may not know which customers will be too great a risk. However, you can take precautions before offering credit to a new client.
Vetting your customers
Perhaps the most effective way to protect yourself from a customer who won’t pay is to establish a credit policy, include it in your contract and discuss it with your client. Your policy should include any factors where you will not be flexible, such as:
- When payment is due
- How much you will charge for late payments
- How much interest your customers will pay on past-due amounts, if any
- Your procedure for collecting money from a customer who does not respond to requests for payment
- Additional fees the customer may be responsible for if you must take legal action to collect what is due
- Your procedure for resolving invoices when a customer is unable to pay
With these and other details in your contract, your client will know what to expect and perhaps take the matter seriously. Meanwhile, if you have not dealt with a particular customer in the past, you would do well to do some research before extending credit. Be sure you understand the industry of the business to which you are offering credit and whether that industry is thriving. You will want to check the customer’s credit score and follow through with references before determining the amount of credit to offer.
Extending credit to your clients builds loyalty, alleviates concerns your customers may have about price and may increase the amount of money a customer spends on your products or services. However, these benefits may mean little if the customer does not pay for what you deliver. Despite taking every possible precaution, you may find yourself waiting too long for payment from a customer who seems unable or unwilling to pay. In such cases, you may wish to contact an attorney who can advise you about your collection rights.