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Credit Terms Rule #1 With new clients, get paid as you do the work. The bill youre most likely to get stuck with, is the first bill a client receives. Quite simply, dont give them credit terms. Credit Terms Rule #2 Get credit card authorizations whenever possible. Either get a credit card or do a check before you leave. You dont want to extend credit terms to new clients without performing due diligence unless its an extremely small amount or you like taking huge risks. Credit Terms Rule #3 Dont give credit without a rigorous credit application and credit check. No exceptions. Credit Terms Rule #4 Get something up front. Commit to getting half up front. Securing a deposit check makes all the difference in the world when determining the likelihood of receiving the second half. Once you make this credit term policy - enforce it. Credit Terms Rule #5 Never extend credit on product sales. Youre not going to make much money on product sales. This is an accommodation or incremental source of revenue at best. Get it prepaid or get a credit card authorization. Credit terms are an important part of operating a business. You have to remember however, you are a computer consultant, not a bank. You are not in the business of lending money so dont make it a habit. The Bottom Line on Credit Terms Credit terms are part of business, but you have to be smart about them. Dont extend credit terms to new customers or on product sales. Do get authorizations and deposits before starting work. If you manage your credit terms properly you improve the likelihood of maintaining positive cash flow. This is what allows you to extend credit terms in the first place. Copyright MMI-MMVI, Small Business Computer Consulting .com. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance} |
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