IS HAVING NO BAD DEBTS ON YOUR BOOKS A SIGN OF SMART CREDIT POLICY?

Your credit policy is a very important aspect of your business. Are you one who likes to take risks or do you avoid them at all costs? Your answer to this question may say something about your credit policy. It is important to carefully weigh the benefits and costs of your credit policy before deciding on a set standard.

"Creditors are a kind of people that have the sharpest eyes and ears as well as the best memories of any in the world." -Benjamin Franklin.

Is having no bad debts on your books a sign of a smart credit policy?

Believe it or not, if you have no bad debts on your books, you should probably rethink your credit policy. Many people have an instinctive aversion to the idea that some of their clients should turn out to be deadbeats. In the Barron's guide to Credit and Collections, however, financial writer James Jurinski makes the crucial point that if you have no customers at all who don't pay their bills, then your credit policy is probably so tight that you are turning away many more potential clients who do.

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