Whether to work before payment.
WHAT EXTENDING CREDIT MEANS
Doing work or supplying goods before being paid.
That is a loan, whether you call it that or not.
WHO TO EXTEND IT TO
Established customers who have paid on time Customers where the amount is small enough to lose
WHO NOT TO
New customers, for substantial amounts Anyone who has paid late repeatedly Anyone who resists a deposit
THE DEPOSIT SIGNAL
A customer unwilling to pay a deposit is telling you something.
WHAT TO CHECK FOR LARGER WORK
That the business exists That they have paid others Basic searches
WHAT TO LIMIT
Your total exposure to any one customer.
A single customer owing more than you can afford to lose is a risk.
WHAT TO DO IF EXPOSURE GROWS
Stop extending further credit until the balance clears.
Say so before it becomes a problem.
WHAT TO RECORD
What each customer owes, at all times.
