Using credit terms and credit extension policies with customers is a delicate operation. You need to be careful about managing money and make sure your cash flow isn’t interrupted by the process, but you also want to make sure your clients will want to buy your services. The following rules can help you maintain good credit terms and keep clients happy:
First Rule For Good Credit Terms: Get paid as you work, and you will not get stuck with major bills. Don’t give credit terms until after the first bill has been paid.
Second Rule For Good Credit Terms: Get credit card authorizations if you can. You can ask for a credit card or do a check before you leave the site.
Third Rule For Good Credit Terms: Demand a credit check and an application and make no exceptions.
Fourth Rule For Good Credit Terms: Ask clients to give you a deposit up-front to protect you from losing money in the future. If you have a check in hand for half the amount, you know you are more likely to get the second half. Enforce this under all circumstances.
Credit Terms Rule #5: Don’t give credit on product sales, because they don’t produce a lot of money. Make sure the client prepays you for this item or that you get an authorization on a credit card.
Credit card terms can be very important to business operation, but you have to keep in mind that you are a computer consultant and not a bank or loan department.
Added By: Joshua Feinberg
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