Establishing Your Credit Policy
Before you start selling your product or service, decide what your payment terms are going to be.
OK, so you’ve made the sale. But are you going to get paid?Before you extend credit, make sure you establish credit policies.Here’s how: First, use a standard credit application form forevery customer. The application should list the company’s legalname, the name it operates under and the principal’s names. Italso should provide complete contact information, including who hasthe authority to make purchases and who to call about invoices,both physical and mailing addresses, phone and fax numbers ande-mail addresses, and any special instructions required.
Next, either on the application or on another form, clearlystate your terms and the consequences for failing to meet them.This could include late fees, legal fees if action becomesnecessary, and where any lawsuit would be filed. Of course, makesure the customer signs the document. And don’t forget theobvious: Ask for and check credit references.
OK, so you’ve made the sale. But are you going to get paid?Before you extend credit, make sure you establish credit policies.Here’s how: First, use a standard credit application form forevery customer. The application should list the company’s legalname, the name it operates under and the principal’s names. Italso should provide complete contact information, including who hasthe authority to make purchases and who to call about invoices,both physical and mailing addresses, phone and fax numbers ande-mail addresses, and any special instructions required.
Next, either on the application or on another form, clearlystate your terms and the consequences for failing to meet them.This could include late fees, legal fees if action becomesnecessary, and where any lawsuit would be filed. Of course, makesure the customer signs the document. And don’t forget theobvious: Ask for and check credit references.
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