Before I get into the slippery slope I’m referring to in the title of this post, how are things for you these days? How’s business going?
I’d love to hear an update on your business … so click the email button in the upper-right of the site here, and send me a note to let me know.
I’d also enjoy hearing from you about if there’s another way we could serve you and your business? Are there any decisions looming that we could help provide insight to?
Let me know … we’re here for more than just “books” and taxes.
But speaking of those books, I’ve occasionally encountered a disturbing habit among some of our newer clients, one which we work to fix as soon as possible on their behalf…
Should I Extend Credit To My Mayfield Heights Customers?
“Not until the pain of the same is greater than the pain of change will you embrace change.” -Dave Ramsey
It’s a common problem, and I’ve talked about it before: customers are asking you for lines of credit, or “special deals” when it comes to your AR. So you ask yourself: should I extend credit to my customers?
My recommendation? Don’t do it. Tell them you accept credit cards.
The biggest problem about giving credit is that you end up spending more time collecting money. Time that could be more profitably used doing most anything else.
The second biggest problem is that some of your credit customers, no matter how big and prosperous they appear to be, will never pay you. If the accounts/purchases/orders of those customers who don’t pay you are big enough (or there are enough of them), you will be forced out of business.
If there is any chance that a customer may not pay you, it would be better not to make this sale. Time wasted collecting … sleepless nights worrying about payment … and real bottom-line losses are all inevitable outcomes of playing Russian Roulette with granting credit.
If you *do* slip into the credit-granting trap, be very clear about payment terms before delivery, and insist on any compliance to the day. Make a lot of constructive noise. Be persistent. Call every day. Visit your creditor in person. Let him know how important the money is to you. Wear him down. He is paying someone.
The person who gets paid earliest will be the person who showed the greatest determination to be paid. It should be you.
Collection is a critical survival tactic. Do everything in your power never to have to use it. But once you must, be absolutely resolute. It should be your first priority every day. If your experience is sufficiently unpleasant, perhaps you will understand the wisdom of not getting yourself into that corner in the future.
I’m grateful for our chance to serve you and your business — and we are dedicated to its success. Which means we want to protect you from all of what could tear you down.
Feel free to share this post with any of your Mayfield Heights business associates or clients you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.
Jeffrey A Campbell CPA