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What to Consider before Extending Credit Terms to Customers

Lets talk money and extending credit terms to customers. If you are operating a business and thinking of extending credit terms to customers, here are a few tips:

  • Determine who you will extend credit to, the determining factors and the length of these terms

  • Develop a credit application process, with trade references, banking and credit check authorization

  • Pull a credit report

  • Improve collection efforts and reduce the likeliness of late or default payments by exchanging payment data with the consumer and business credit bureaus

  • The history and amount of revenue generated by a customer will help in determining who to extend credit terms to

  • Have a collection policy in place to protect and manage your accounts receivables.

  • Know the consumer laws

  • Extending credits is most valuable to a business that has already established a solid cash flow

  • Don't extend terms to every customer.


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