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Creating a Credit Policy that prevents delinquent accounts and
results in fewer bad debts.Or
How to Get Paid
by Michelle Dunn
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Determining how and who to extend credit to & setting credit
limits.
Gather customer information using Credit Applications.
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Credit Applications will give you:
• Credit references
• Bank references
• Employment information
• Financial information
• Permission to check references
• Permission to pull a credit report
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Determining your criteria for new customers that you want to
extend credit to.
What do you need to know?
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To determine your criteria for new customers you will need to know:
• Your terms
• How and when you want to get paid
• How much risk are you willing to take
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To determine how much credit to extend to a customer ask yourself:
• Do they have a pattern of paying on time or late?
• Is there chronic delinquency?• Is there a seasonal pattern?• Are poor payments due to employment
issues, change in marital status or a one time event?
• What are the customers anticipated monthly purchases?
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If the customer is a business, ask yourself:
• Where is this business going & how long have they been in business?
• Who are their customers?
• What does the competition look like?
• Do they have any bankruptcies, filings or judgments against them?
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Limiting your Risk
• Get a personal guarantee
• Offer month to month credit
• Offer ship-to-ship credit
• Ask for a security deposit
• Get a 50% deposit on every order
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Setting payment terms, due dates and establishing penalties for late
payments
Your credit policy will be based on your terms, due dates & what you want to happen when a customer is late or
doesn’t pay
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Setting your payment terms:
• How often do you want to get paid?
• Do you want to be paid upon completion of your work or would you like to offer 30 day terms?
• Maybe you want to offer 30 day terms with a discount if the invoice is paid in full within 10-15 days
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Setting your due dates:
• No matter what you decide on for terms, choose a time of month you want to be paid. Such as the first or end of each month, the 15th or any date that works for your business.
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What do you want to happen when your customer is late or doesn’t pay
you?
• Do you want their credit to be revoked?
• Do you want to put their account on hold for future orders until the balance is paid?
• Do you want to make a phone call or send a letter?
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Organizing steps to be taken when customers are past due or over
their credit limit including bouncing checks
• Refer to your credit policy
• Make a collection phone call
• Send a friendly (or not so friendly) reminder
• Revoke credit
• Follow up
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Utilizing your sales staff with past due accounts
• Do not oversell!
• Once the account is past due have the sales person who made the sale contact the customer.
• Withhold commissions until the item is paid for in full.
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Easy Credit Policy Steps
• Print out or buy Credit Applications
• Put them at the front desk
• Have every new customer fill one out
• Mail one to every existing customer
• Check ALL references
• Email me with any questions
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People owe you money?Want to collect it?
• Over 100,000 businesses have slow
or non-paying customers – learn how to collect that money quickly and
keep the money coming in with
Michelle Dunn’s books.