A client using credit cards or loans means that you still get your money and this “loan” or “credit risk” is someone else’s problem. Selling directly on credit means that you’re this “someone” whose risk it is. Deciding to give your client credit means that you get more business, you make more sales, but it also means you need think of various extra bits you normally wouldn’t.

First thing first, you need to establish your own credit policy, conditions under which someone would get credit. Important bits need to be written down, agreed and signed by both parties. Conditions and standards regulate approval process, credit types, various charges applied etc. 

Something you need to determine is how you choose who to give credit in the first place and what are the maximum amounts you’d be okay yourself to give credit. It is fundamental if you think about your essential risk of possibly not collecting the amounts given on credit – who you consider reliable enough and what’s the amount you’d be okay to not collect at the of the day and take as your loss. Obviously it’s not 100% loss, but you need to consider it as it could possibly be.

Another considerable factor to note is the collection. There are deadlines and conditions you need to set and stick to them. There’s nothing worse than not caring about your business.