Top Ten Things Business Owners Do Wrong When Managing Customer Credit

Top Ten Things Business Owners Do Wrong When Managing Customer Credit:

10.  Failing to obtain a completed credit application

9.  Opting not to seek a personal guarantee

8.  Getting a personal guarantee, but opting not to get one from the spouse and finding out that all assets are owned jointly and potentially shielded from creditors

7.  Failing to verify information given on credit application

6.  Failing to properly evaluate credit risk even after obtaining and verifying information given on credit application

5.  Failing to take into account the “macro” exposure when aggregating all the different accounts that are extended credit terms

4.  Failing to charge interest on late payments or offer discounts on COD or early payments

3.  Failing to demand the money owed when an account is delinquent/failing to consider third-party collection help

2.  Extending further credit to a delinquent customer in the hopes they’ll “turn it around” with the transaction you are “helping” them with

1.  Failing to periodically update information on credit application (“false sense of security syndrome”), including failing to copy checks used in prior payment