News & Resources

Prevent small business debt with stringent consumer credit rules

Aug 23, 2012 Walt Wojciechowski

In a tight economy, late payments are increasingly harmful to the welfare of small businesses, and result in a growing need for debt collection professionals. However, for businesses yet to be plagued by tardy clients, there are a few measures that can be put in place to inspire customers to pay on time. For example, a recent article from Business 2 Community emphasizes the importance of creating relationships with consumers. When businesses get to know their customers, their needs and their finances, they can more accurately assess when a credit extension is warranted or when it is likely just to result in a default. These details can be fleshed out by using reports that have information on consumers' credit data and how they've handled payments in the past. If a business decides to extend credit, it should make the agreement official. "Make sure an agreement is signed that clearly states when and how the customer will pay and what will happen if they don't," the website states. "Having this in writing will be useful if you ever find yourself needing to chase payments, and it lets the customer know just how seriously you take your credit extensions." If customers balk at the idea of signing such agreements, businesses will likely be better off without them. Owning a small business requires not only helping customers, but doing what is best for the company.