Setting Credit Policies is not at all an easy job but you need t do that as that is what you do. Many times entrepreneurs consider that to be an option to be in business. Hence people have to lend money to their customers. But there are a lot of problems that may crop up while trying. Then comes the need to learn a smart way which brings you business as well as generates revenue for you. That is what you will learn here.
The first thing you need to know in this regard is the amount of credit you should offer. The simplest answer to this question is that it should be that amount which keeps you afloat in your line of business. Do not overdo it. Just keep this in your mind that you need to change your policies whenever required. Hence the lending policies are also viable for a change to a returning customer. These are very important deals and never forget them.
Another thing is that you will learn things slowly and you need to give them that time. Any business needs time and you need to give it that time. Remember that Rome was not built in a day. In the same way you will learn things with and your business will also flourish with time. This is no rule for you as the world follows this.
The next thing is to think about whom to lend your money to? You need to run a background check for this. Understand one more thing that it is easier to lend money to business houses as their information is readily available in public. On the other hand it is difficult to locate such information in case of an individual. So business credit policy is a better way out of your apprehensions.
Do not be too liberal as you may become the victim. It is your aim to get customers who are willing to pay you back the money they have borrowed. If you are liberal then there are chances that you may be paid n the last. Again if you extend days of your payment also your competitors will know about a particular client's intentions before you!
Remember one thing for sure that there are no rules that actually tell you to do this and that while setting credit terms for your customers. You need to be cautious about the kind of people you are lending your money to. You got to explain it to your customers that if they need lots of credit then need to pay you back so that you are in business. For this you need to be setting credit policies which are flexible yet profit worthy.