8 Tips for the Small Business Owner thinking about setting up a Payment/Credit Policy

credit policy

Having been exposed to my current batch of small business clients, some of them have been in business for some time, whilst others have unfortunately shot themselves in the foot by issuing maximum credit terms out.

Yes, I can understand it if its one of your biggest Customers – and you need to keep them happy, but invariably if you offer them terms, they are unlikely to pay within the 30 day normal term period that is available, and there are many businesses out there that are just not doing enough to avoid these kind of pitfalls.

The following tips looks at what you can do for your business, which is crucial if you are just on the verge of starting out and need to get the business in, and you need some sort of framework to govern your Bad or Late Paying Customers:


If at all possible, get your Customers to pay you a higher deposit to you.  By paying a higher deposit, you are mitigating your risk position.  For instance, if you feel that your Customer is likely to not make payment to you, then request that they clear at the very least a deposit amount to you, before you start any work for them.


Payment Plan

The standard two, three month payment plan to be made consecutively over a set number of weeks, or if its high value contract then over a set number of months.  That way you mitigate the risk of not getting paid, by asking them to pay you 30 days after terms have been issued.

PO Numbers

There are many a public sector organisation or large corporate company that insists that the only way you are likely to receive payment is on the back off their PO number being approved.  This is an arduous process, and further information can be found on the link below.


Credit Check

I implore all business owners to either obtain a credit checking package, or get someone that can.  For instance, the Writer of this Article can credit check new business for you, and/or advise of certain pitfalls in your Customer area to make you aware of the benefits and risk factors that you would need to be aware off.

Sense Check

Credit checks aren’t worth it, I hear you say.

Well, yes they are, but if you think that this is a waste of your time, then there are invaluable resources that you can look through to ascertain whether or not the Customer is being truthful with what they are saying.

An instance of this is that one of my clients recently requested for a credit check on a Company that had been fairly well established, for 20 or so years.  Yet, on their website they had advertised that the company in question had been dormant.  Dormant – what does that mean, like they have been empty.  Yes, that’s exactly right – its as though they hadn’t filed any accounts, and therefore could not build up a credit rating.  Naturally, I had advised my client not to bother with this, or it was at their own risk if they wished to continue with this.

Here are some free websites you can use to utilise whether or not a company is still trading or not:




Social Media Check

Please refer to the below which details this further:


But the same could be to sense check Customers who are realising their social identity.  This will give you some picture under recent Sustainability Accountancy changes that are taking place right now, detailing our need to be recognised to enable our Customers to have an idea off what they are doing at the touch of a button.

Terms and Conditions (both online and offline)

Making sure that your Website Terms and Conditions are up to par.  As they can be open to scrutiny and if you participate in Distance Selling to Customers, then you could find yourself on the wrong end of the Courts.  Offline terms could relate to your contracts and payment terms and conditions.

I would recommend obtaining as much help and expertise you can from an expert if you feel that changes could be made to avoid leaving you gasping when it comes down to it.

The below would give you more guidance in terms of achieving this further.


Penalty charges

Its Free and it can open up an extra income stream into your business, but I would highly recommend all Businesses to start utilising this valuable tool.  Further comments can be found in the link below:



There is no right or wrong answer for those looking to manifest a Credit or Payment Policy of some sort, but if you need any assistance, then please do not hesitate to contact the Writer off this article who would be best placed to guide you further.


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