Keep these three simple rules when giving credit to your customers. Mind you now, these three rules are not something I choose from thin air. This is the method used by credit card companies to give credit to millions of customers every year.
1. Start small
Offer a small amount of credit at first. Starting with about $ 500 to $ 1,000 (or whatever works for your industry) is ideal. It is a mistake to offer you great credit rights right from the start, as you may be able to take advantage of it. All you want to do is build a credit history with your customers and avoid the big risks of go-go.
2. Appreciate them
Once you do business with them successfully, slightly increase their credit limit. Be sure to tell them about it once you do it. After more success together, do it again. Every time you increase their credit limit, you create a “feel good” moment for them, encouraging them to do more business.
Always enforce your credit extension, as credit card companies do. If the client fails to comply with the terms of the credit they receive from you, you need to take action. Start by imposing penalties on fees or interest, and if necessary, use a collection agency.
Another important factor to keep in mind in terms of extending credit is maintaining a consistent credit policy. Write down your policy, give it to customers for review, and have them sign it, stating that they have read and agree to the terms.
Offering your customer credit is a trust act. Your customers will appreciate the trust you give them and in most cases they will not abuse it. You may just find that credit offers will keep you head and shoulders above the competition!