How do you set a credit limit?

Discussion in 'Growing and Managing a Business' started by RevaxMedia, Apr 15, 2013.

  1. RevaxMedia

    RevaxMedia
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    Hi guys - we have a good arrangement with a long standing client, maybe 2-3 years and they have requested a credit limit - how would we go about setting this up or working out how much? Usually they just pay the invoices within 30 days but have recently ramped up their client base which has given us more work - don't want to upset them but don't want to be out of business either?

    Anyone have any ideas of working out credit? or is it just dependable on the business owner?
     
  2. Fergal

    Fergal
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    As a start I'd suggest asking the client how much of a credit limit they are looking for. If it's not high you will probably be happy to give it to them. If it is higher than you are comfortable with, you can look at their previous business with you and make a decision as to whether you feel that they are good for the risk.

    Something else you could consider is getting credit protection insurance. This would allow you to give credit and then be covered with insurance in the event that your client can't or won't pay.
     
  3. Forrester080

    Forrester080
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    You should set it up but as low as possible. Maybe it's in the policies that they will earn the same benefit at every rate of credit limit but you can tell them that with a lower rate they may get more benefits than the higher ones, etc.
     

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