Providing credit to customers

All business owners understand that being in the business world means similar to being in a battlefield. Businesses of all kinds and sizes exist in a competitive environment. Although businesses would prefer making all sales on a cash basis, it’s not always possible.

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Selling on credit

To win the business competition, you need to give your customers the best offer available. Whether it be lowest price, best product or service, or most convenience. For example, if your competitors are giving their customers credit terms, you will need to offer something similar to get their business.

Selling to customers on credit has pros and cons. If you want to determine whether or not selling on credit is ideal to your business, you must consider the effects on his company before venturing into the potential minefield of taking credit risks with customers.

Like we’ve said, providing credit to your customers gives you the advantage of allowing you to meet the competition. If you want to offer more favourable terms, you might consider giving discounts for prompt payment.

Another benefit of using credit is it helps in increasing sales. It may not happen immediately, but if your competitors are not offering credit terms, then you will gain sales by offering credit terms, because your customers will buy from you instead of having to pay cash from your competitors.

Offering credit to customers means that you are giving them your trust and confidence that they are capable to pay their bills before their due dates. Customers will reward these gestures of confidence by continuing to buy from you. They will feel a degree of loyalty, and they like to do business with someone who trusts them.

However, selling on credit also has disadvantages. It can have a negative impact on your business’ cash flow, the risk of not getting paid, and more.

If you want to know more on providing credit to your customers, read this: https://www.smallbusiness.wa.gov.au/business-advice/financial-management/providing-credit-customers

Friday, March 15th, 2019 Perth News