Question

What is the purpose of giving credit terms to customers? What are your options when the customer does not pay on time?

Answer 1

The Best reasons to offer credit to customer is as follows:

1. You Gain Customers= when you have more payment options people are more likely to buy from your business and some company prefers to buy on credit rather then upfront payment because this your are more likely to gian customers. Providing easier method buy customers are more likely to be attracted to that.

2. Advertising= When you give credit to the customers then the customers will promote you through word of mouth advertising and this is always a good thing for the business you get free promotiong and you should make sure that your new customers also the other payment option available to them.

3. Large Purcases= If you give people a credit then they are more likely to purchase in larger quantity then they usually do that this will help your business grow and selling larger item is very easy if you offer them a extended credit to them in which they can make payment is several months.

4. Stability= You show stability to big business that you can offer them credit and this shows them that your businees is legit and well established becuause new cutomer cannot give them the credit for the reson of financial stability.

5. Stand Up against competition= Because of this you stand up against other competitiors in the eyes of the customers. This will make you stand up different from the competition.

The options you have when to customer does not pay is that are as follows:

offer payment options= you can offer the customer some payment options like fixed amount each month untill the payments are done in full.

Legal action= you can take legal actions against them by sending them the notices for payment by using an attorney.

Discount and seetle up= the customer usually dont pay when they themselves are struggling to meet the end so you can offer them some kind of discountand try to settle it in one payment.

Consider cost collection= you should try to collect form the busniess cost incurred while making the product or providing the servies.