Do You Have A Business Relaunch Credit Strategy?
As governments give the business community the green light to re-open, my first reaction was to remind clients to be sure they performed credit checks.
You need to do credit checks not only on your new customers (and we hope there are lots!) but also on your existing customer base. Like I mentioned in the accompanying video, some of our biggest customers may not make it. Performing a stress test on your current clients can help you avoid unnecessary risks.
But, upon further reflection on the question, I have another solution that will help everyone in our economy.
Let's Pay Our Bills
If you are fortunate enough to have cash on hand, or you have accessed government assistance ($40,000), don't sit on that money. Pay your bills as part of your business relaunch credit strategy. Every time we pay a supplier, that money goes toward someone's salary or to purchase raw materials for manufacture and resale. You can help get the cash moving within our economy.
Extending credit to a new or existing customer should also be a part of your business relaunch credit strategy. This is also another way to give our economy a boost.
I recognize it is your money out on the street. Still, there are ways that an experienced Credit Manager or Certified Credit Professional (CCP) (See https://creditinstitute.org/), can help you to make sound decisions.
There are many ways to creatively grant extended credit terms to customers without exposing yourself to unnecessary risk. Extension of credit terms to customers provides extra liquidity in the marketplace and further benefits the economy as we re-open.
Make Educated Decisions
I am nervous, yes, as I imagine many of you are as well. We don't know what to expect, but we can make some educated decisions. In the recovery business, we call them "controllable’s.”
A controllable is something that you can influence.
- Making an educated decision as to who you will sell to on terms is a controllable.
- Listening to the marketplace and understanding your customer's market is a controllable.
If all the intelligence you and your credit team assemble points in favour of granting credit, then open a small credit limit first, and see how it goes.
For more information about the credit granting process, visit our other blog entitled The 4 C’s of Credit