For one-off events, the majority of portable restroom operators require payment in full before delivery. However, PROs catering to businesses extend credit with the promise of long-term contracts. This act of goodwill makes it easier to secure new clients, as trust is a crucial component of fantastic customer service. However, maintaining your accounts receivable is risky. Successful businesses incorporate policies that limit credit risk and ensure new accounts are credit-worthy. Consider the facts to determine if you should check the credit scores of new accounts or impose credit limits:
Portable restroom operators suggest that business growth is a top reason for extending credit. Operators, who are in a financial position to offer alternate payment plans, cite several reasons for providing credit to business accounts.
Start by determining the amount of risk that your business can take. You need to weigh the positive impact on sales by offering credit versus the worst-case scenario of non-payment. Each new assessment needs to start with the PRO figuring out if their financial position can handle additional risk.
Review existing sales and contracts to determine what the average customer spends. You should extend enough credit for a new account to use your products and services, but not more than you can safely cover. Check out your competitors’ payment options, but use your financial statements to determine your risk.
Many businesses aren’t in a position to offer unlimited credit to new accounts. PROs mitigate risk by writing credit policies that meet their long-term goals.
New accounts aren’t easy to come by or replace. Have a clear plan in place that ensures your actions deliver results. Minimize risk by reviewing a new customer’s background before offering a significant amount of credit. Inquire about a company’s financial stability by looking at:
Depending on your company’s needs, you may go with a conservative or liberal credit policy. Entrepreneur suggests that “if your customers are in “soft” industries such as construction…you would do well to use a conservative policy.” Operators enable growth by making decisions that increase sales and adequately vet new accounts.
The decision to extend credit, check credit scores, and impose limits requires careful consideration. Experts in the portable restroom industry suggest using due diligence when extending credit to new accounts. PROs that are thorough in their financial reviews and credit assessment lesson risk while growing their revenue.
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