Cash Management Secrets

Proven cash management strategies that improve cash flow, collect past due money, and increases profits in tight credit markets.

Changing World of Business Credit

Remember, "The Little House on the Prairie"? I saw a re-run on a station my kids were watching, and it took me back to when I used to watch it as a kid myself. But what does that have to do with business credit and collections?

You know the show; it follows young Laura Ingalls’ life, as she grows up in a frontier town with her family in the late 1800’s. What struck me was one scene in particular when the school teacher was at the general store, picked out some dry goods, and asked the shopkeeper to put it on her account. "Sure thing" was the reply.

No credit check, or application, not even a signature.

He took her at her word because he knew her. His kids were in her class. They probably knew all the same people, attended the same church on Sundays, and so on.

"Things have really changed." I thought to myself. But have they really?

Many business owners today make the same mistakes with their customers. They assume because they know a person, have done good business with them in the past that granting credit is okay.

In the business-to-business world, extending credit without a little well structured background is equivalent to giving customers a book of blank checks.

Am I saying "Don't take customers for their word", or "Don't extend credit" ... No, but what I'm saying is today's business credit market has changed.

Are you willing to risk your livelihood on a handshake, or are you willing to do a little due diligence to keep business friendly? In another articles, I'll share one solution to lower your business credit risk, while keeping this process cordial.

© 2008 Cash Management Secrets, All rights reserved.

Bob Blackburn is the Managing Director of the Cash Recovery Network. Learn more about Cash Collection Methods in his insightful interview.

Posted by Bob Blackburn on September 15, 2008 10:44 AM | Permalink

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