The particular 5 Reasons Every Small Business Must be Extending Credit

There is certainly much debate over whether or not extending credit to customers is a smart exercise for small businesses. There is risk involved, with providing a service or product and relying the customer to pay you back in a later, specified date. Some state it is harder for small businesses to monitor their own credit department, as they don’t have the various tools like Fortune 500 companies, yet thanks to emerging technologies, handling their particular customers’ payments is easier than ever. The facts remains that, if your business model supports the practice, payment terms open immense opportunity for your small business

The five Reasons Every Small Business Should Be Extending Credit

1) CUSTOMER LOYALTY – Extending credit is the easiest way to tell your customers you appreciate their business. When you provide them with the opportunity to be more versatile with their cash flow, and show them which you really do trust them, this isn’t likely to be something they forget. They are going to keep coming back to you, not only for your offers you provide, but for the fact you’ve made them feel appreciated.

2) ECONOMIC REPUTATION – Extending net terms is a small act that can send a large message. To other companies, banks, customers, and so forth, if your company is providing credit to customers, it implies that your own institution is financially healthy. To make payment terms a reality, a person, as a business entity, have to have a solid cash flow and access to working funds. By simply extending credit, you are stating to the public that this is reality, which immediately boosts the reputation of your company.

3) PRODUCT REPUTATION – Small business owners are at times hesitant about payment terms as they are afraid that customers will receive their product or service, not be satisfied, and then refuse to pay. However , by extending credit, you are letting customers know you believe in your product, and support it’s value. You happen to be willing to take the risk, because you understand your customer will be satisfied.

4) COMPETITIVE EDGE – Let’s encounter it, not all businesses are extending credit score. Therefore , those businesses that are instantly gain a competitive advantage.
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If a customer has a chance to have more control of when they pay, giving them more of a handle on their cash flow, they’re going to become attracted to the company that makes this probable. Beat your competitors to it and be the main one extending credit.

5) INCREASED PRODUCT SALES – Without a doubt, every small business desires a way to increase sales. Extending payment terms is the most cost-effective and stress-free way to make this happen. Think about it: if you are giving customers more time to pay, they immediately have a bigger buying power. Not only do the above reasons contribute to increased sales, but the sheer fact of your clients having longer payment periods indicates they can purchase more from you.

Really simple. If your business model can support increasing credit, there is no reason you should not be. Thanks to advancement in technologies, small businesses can run their credit process seamlessly, without stress, giving them chance to take advantage of all the immense benefits online terms can have for a company.

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