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Credit is offered to a small business customer when the owner sells a product or service to the customer and defers payment to a later date. Extended Definition. When small businesses offer credit to customers, it can increase sales, customer loyalty, and word-of-mouth recommendations.
Best Practices for Giving Your Customers CreditDo check references.Do use a credit application.Do get a credit report.Do establish a credit policy.Don't extend too much credit.Don't extend credit informally.Do consider the company type.More articles from AllBusiness.com:
How to get supplier creditStep 1: Work with suppliers who report credit. Some suppliers report credit information to the bureaus, while others do not.Step 2: Ask for a little credit. Most businesses make the mistake of asking for net-30 terms immediately and giving up when the supplier says no.Step 3: Pay early.
The Popular Store Credit Strategy One popular strategy is offering shoppers X% more money back in store credit than the purchase price of the product. For instance, if you were to buy a product for 100 dollars and decide you didn't like it and returned it, you would get more than 100 dollars back in store credit.
In the credit application, you should request:bank details including account name, BSB and bank location;accountant's details;permission to do credit checks; and.trade references from at least three other suppliers, including full business name, ABN, mobile number and email address.17 Sept 2019