Finance Credit: How and What to Extend
Finance credit should be extended very cautiously to your clients. Even after you have built up a solid history with a client, you should still be strict about your practice of credit finance. The use of finance credit and good basic billing practices will be a large factor in determining whether or not you actually get paid for the work you do.
Rules for Finance Credit
- Do not be too quick to give new clients finance credit.
- When clients ask for finance credit, always have them complete a credit application and send out some credit reference letters.
- After you have extended a client finance credit, keep their lines of credit relatively low until they’ve built up some history with you.
- With new clients, even after you get a credit application and send out some credit reference letters, start them out with $500 or $1,000 in finance credit. Don’t allow them to hang you up on a $5,000 or $10,000 leash before they’ve proven they’re able to pay small invoices.
- If new clients come on with a large project, rather than extend large amounts of finance credit, get larger deposits amounts.
To ensure you get paid regardless of finance credit, here are some guidelines to follow with your billing.
Rules for Billing Practices
- Always insist on written agreements, even if it’s a very small job.
- Always get a deposit check on any major project.
- Set up payment schedules that make sense. Do not take on a large, major project or any project for that matter, without getting at least 25% down.
- Bill weekly and not when you get around to it. Being busy is no excuse for sending your invoices regularly.
Bottom Line on Finance Credit
As a business owner you want to be able to extend credit finance to your clients. When you do so, you always have to remember to protect yourself first. Don’t be too quick to extend credit and make sure your billing practices get you paid. These are two major ways to keep yourself from getting into big financial trouble really fast.
In this article, you’ve been introduced to Finance Credit. To learn more about how you can improve your knowledge about Finance Credit, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.