4. Don’t jeopardise your business
Know your own limits as a business. Even if you’d love to extend credit for 90 days to all your clients, you still need to deal with your own creditors.
Make sure your clients know where the line is and the consequences of crossing it, whether you’ll charge interest on late payments or call in a third party to collect the debt.
Beware that it may come down to whether you want to keep the client. It’s never easy to refuse business, but sometimes it’s for the best, especially if they’ve never paid.
While generous payment terms can give you a competitive advantage at first, they could be detrimental to your bottom line. Payment terms are about enabling clients to pay you when they can while maintaining your cash flow.
When you have this balance right, you’ll not only keep your clients – you’ll see your business thrive.
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