Things you should consider before you start selling your goods on credit to your customers
(1)Trust:Do you trust your customer enough to sell your goods to him or her.when you have issue of trust to that particular customer” As in,you don’t trust him enough, please for your own good, don’t sell your goods to him because you might end up not getting your money back .
However,offering too much credit is one of the reason the businesses get into trouble.If you consistently experience a negative cash flow,you might be selling too much credit.You can either reduce the number of people you give credit to,or you can shorten the amount of time you want them to make the payment,For example, if they normally pay you after two months,tell them to try and make the payment in one month time.
You want to sell your goods in other to buy new products,When you insist on cash and carry you may loose a lot of customers.Since you are not the only customer in the market,you might consider to sell on credit .
(2)Increased sales:Your business needs cash to continue operating.It also needs customers who make large purchases.Customer tend to buy more when you give them goods on credit.This is the main reason for offering credit than you would when you insist on cash and carry.Also,don’t be greedy and offer every customer credit .You need some cash customer to keep cash coming in every month.
Offering goods on credit can give you a lot of customers than when you insist on no credit.Customers will also be happy that you gave them goods on credit because you trust them.However,as they pay their oustanding balances,they will be more likely to buy new one.
People that sale their product on credit stand a chance to make more sales than people that insist on no credit.Also,people that sale on credit make more profit than the people that do cash and carry.
Note that you can only give credit to those that you trust to avoid loosing your money and your product in the process.
Finally, before you consider to sale your product on credit think about the advantage and disadvantage to avoid loosing both your product and your money .