Cash Flow Tips Part 3: Firm Credit Policies

Part of setting yourself up for success with healthy cash flow requires establishing firm credit policies… and practicing them proactively and consistently. Before you offer your product or service, make it a regular practice to inform your potential customers of your credit terms. Such terms should include performing a check of your customer’s credit and business references, and at times requiring a deposit, particularly for customers whose credit is less than stellar. In some cases you may want to require the payment of cash for purchases, which will create instant cash on hand and reduce bad debt expense.

Be aware that while firming up your credit policies can be an advantage to you, it can also be a disadvantage at times. Looser credit policies invite more opportunity for customers to purchase your products, whereas tighter credit policies could potentially have the opposite effect. Balance is key. Exercise wisdom and prudence in measuring the potential for sales increase versus the possible increase in bad debt expenses.

The Jayaram Law routinely and successfully assists its clients in their business-to-business (b2b) collection needs.  We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.

If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting