Apr 13, 2020 MicroBilt News
By definition, small businesses are more vulnerable than their larger counterparts. The owners and staff simply don't have the same resources and assets to draw upon if things don't go as planned. It's why a lack of cash flow isn't just a nuisance to small business owners, it's downright devastating. When about half of all small businesses fail within five years in a normal economy, this grim statistic is only made worse when facing a global disaster like the coronavirus. But before you despair, credit screenings may be a key to helping you stay afloat during even the worst of times.
The Power of Bad Debts
No matter what kind of business you own, getting a client to pay on time is never easy. They may ignore due dates on invoices and give you the brush-up when you remind them that their account is running a little high. Small business owners find themselves in a sticky situation because they don't want to endanger the relationship they've built with the customers — especially if the customer is known to pay up eventually. So while you certainly can get a collection agency or a lawyer involved, these extreme measures are often more trouble (and more expensive) than they're worth.
How to Avoid the Mayhem
If you want to protect yourself, especially during precarious times such as these, you may need to start keeping better track of when and how payments are coming in. Sometimes just reminding a customer that you're paying attention to their balance can inspire them to take action. However, it's exceptionally important to be flexible when you can by offering anything from payment plans to late fee cancellations. By offering to work with people during trying times, you establish a firm foundation of goodwill and trust.
How Credit Screenings Help Your Revenue
Small business owners might be surprised at just how many customers will make an honest effort to pay their bills — especially when they make an honest effort to support their customers through trying times. That being said, some customers simply can't or won't pay no matter how understanding you are.
To ensure this doesn't happen to your business, you may need to take a stronger stand when it comes to accepting certain clients. When you research a person's credit history through a screening tool like the PRBC Consumer Report or bank verification, you can better predict whether the customer will be able to pay. If the report doesn't show the most stellar history, you can either request a down payment, extend less credit, or deny the customer outright.
If you're interested in learning more about which screening tools are right for your business, Microbilt is here to help. There's nothing more important to us than helping our customers help themselves. With so much economic uncertainty in the air, it's crucial for small business owners to make transactions with both eyes open.