You want to open credit lines for your clients. Good for you! Yet, you have some questions and some fears. Don’t sweat it. We can answer them. Here are the answers to the top 8 questions regarding setting your credit policy. Still have questions? Book your free consultation with Clients ARM today!
- Should I Offer Credit to All My Clients?
In a nutshell, no. Though offering credit to all clients may bring more potential clients in the door, it can also bring problems through it, too. Extending credit to everyone comes with risks. Offer credit to customers who have a history of prompt, on time payments. This way, you will still get your money on time.
- Do I Have to Create a Credit Policy?
You don’t have to make a policy, but you should make one to make it easier on yourself in the long run. A policy lets your clients know your expectations of them and what is and isn’t acceptable. It also acts as a guideline for your business.
- What Should My Policy Include?
Your policy should include your business hours, your due date, and your late fees. It should also include how your client can pay. An electronic policy should be hyperlinked on your website.
- I Know I Should Send My Client a Copy of the Policy, but What Else Should I Do with It?
Post your policy in your office. Send an electronic and printed version to your client. Put your policy on your website. Put your policy in a car, take it with you to the stars. Just kidding about that last part. You should, however, make sure your client (and potential clients who might use credit) know the rules by making your policy available to them. Your clients can’t say they didn’t know the policy when they own it several ways.
- When Should I Set My Due Date?
It’s up to you. Some businesses require payment upon receipt of an invoice. Others give two weeks to a month to collect payment. You could set your payment date for the 15th or 30th of every month. It’s up to you, but it is suggested to set a due date of some sort. Be sure to place this on all bills, statements, invoices, and due dates.
- Should I Charge Late Fees?
Again, the choice is up to you. Late fees should be charged in accordance with your state’s laws. Some states have a set amount you can charge as a late fee. Stay within your state's laws.
- Can I Offer a Discount for Early Payment?
Yes. You can offer a small discount for early payment of an account, such as 2% to 10%. Most businesses don’t offer a higher discount than that.
- Should I Offer Payment Plans for Those Who Can’t Pay in Full?
The choice is up to you. If your client has been down on their luck and cannot pay, but wants to pay an amount they can afford, you can work with them to give them a payment plan. You oversee offering payment plans and you don’t have to give them to every customer.
Do you want to offer your customers credit, but aren’t sure how much time you’ll have to manage it? Are you having trouble managing your own accounts receivable? Does it seem like it takes too much time out of your day, the time you could be using to work on other things? You’re in luck! Clients ARM is an account receivable manager who has over 30 years of experience. If you’ve been thinking about hiring virtual accounts receivable manager, why not hire the best one? At Clients ARM we use old-fashioned customer service principles and innovative technology to put your mind at ease that you’ve hired the best in the business. So, what are you waiting for? Contact Clients ARM today for a free, no obligation consultation!