Credit and collections are for many small employers what changing diapers is for many parents: although everyone agrees it's essential, no one really wants to do it.
As a result, a credit and collection policy is something a lot of small employers put off developing until they absolutely have no other choice. As their customer base builds, and more and more customers want to pay by credit, they realize that they need to open up a credit card account or offer credit terms. Or they ignore those few customers who don't pay their bills, until the few grow into many, and suddenly they realize that they need to spend time collecting overdue accounts.
The problem with this approach is that small businesses that don't plan ahead frequently end up spending a lot more of their time fixing the trouble than they would have taken if they had spent a little more time thinking about their credit policy beforehand. And, in countless cases, a poorly planned credit policy has ruined what was otherwise a thriving business.
The purpose of this discussion, then, is to walk you through the process of setting up a credit and collection policy. No one wants to spend all of their time collecting debts (unless, of course, you're in the debt collection business). Your time is much more productively spent doing what you do best running your business. But if you just spend a little bit of time thinking about your credit policy early on, you can save yourself time and money down the road. The success of your business may depend upon it.
To get started, check out the following:
- understanding your credit options
- building a credit policy that works
- accepting credit cards
- improving your collection cycles
- accounting for bad debts