One of the major challenges facing small businesses is customer invoices going unpaid for weeks on end and causing significant cash flow issues. It is no wonder, then, that owners of these businesses might be hesitant to give credit to customers when they don’t know that they will ever see the money they are owed.
Think about it – do you really know who you’re giving credit to? How do you know if they have the resources to pay it back? Is this going to be money you and your company never see again? You would probably only offer credit to a client that is having cash flow problems of their own, so there is a real risk that you might not see the money again. At the very least, it’s important to assess the credit risk of new customers. (more…)