What to consider before giving credit to customers

[Activator230822]

As far as business is concerned there are two types of sales. We normally have cash sales and credit sales. A cash sale is made when the customer pays for a product or a service from a seller. A credit sale is made when the seller agrees to sell the product to the customer and pay for it at a later date.
So there are some factors that the seller needs to keep into account before giving credit to customers.
Some of these are:
The seller must know the credit worthiness of the buyer - This is easily known by reviewing the credit history of the buyer.
The seller must also determine the capability of the buyer towards repaying the credit - Here the seller must be in a position to give a credit to a person that can afford to repay the credit.
Another point to consider is the current economic situation and climate if it can allow the business to offer the sale in credit.

 

[Augusta]

The truth is that a lot of business will not thrive without selling on credit as you might need a high turnover rate especially if you are selling perishable products. You would need to dispose of your goods as soon as possible. but then you would need to take into consideration some things before granting anyone credit
You would need to look at the credit worthiness of the buyer maybe by reviewing the credit history of the buyer.you can ask other sellers about the buyer history with them

Then check the capability of the buyer towards repaying credit - This is about giving credit to a person that can afford to repay the credit.

 

[King bell]

When considering whether to give credit to customers, there are several key factors to consider.

First, you should assess the customer’s creditworthiness. This can be done by reviewing their credit score, looking at their payment history, and checking their credit reports. Knowing the customer’s creditworthiness can help you determine whether they are a responsible borrower and will be able to make timely payments.

Second, you should determine the amount of credit you are willing to give the customer. This will depend on factors such as the customer’s creditworthiness, their current financial situation, and the purpose of the credit.

Third, you should establish the terms of the credit agreement. This should include the interest rate, repayment terms, and any fees associated with the credit.

Fourth, you should determine the security you will require from the customer. This could be a down payment, collateral, or a personal guarantee.

Finally, you should consider the customer’s ability to make payments. This includes looking at their monthly income, debt-to-income ratio, and other financial obligations.

By taking these factors into account, you can make an informed decision about whether to extend credit to a customer.

 

[TOZZIBLINKZ]

Issuing credit in your business is absolutely one of the best way to maintain customers patronage as well as loyalty in your business organisation but it is absolutely very advise that you become very mindful on how you give credit sales to your customers and clients. When an individual is short of money and comes to you to purchase goods and services on credit it is absolutely very good and important for you to take an eye view of the person in order to analyse whether he or she could be able to repay back the price of the goods in which he or she have bought on credit.

You could personally ask him some questions pertaining to his personality is such as his or her name his or her workplace and his or her home address. Asking personal questions like this can help you detect his or her whereabouts especially when the time to repay back the price for the goods and services bought on credit is due.