Consequences of excessive credit sales in business.

[Axis]

It is no doubt a good thing if a business owner or business manager wants to issue goods and services on credits to customers and clients because according to statistics and research this has been one of the most expected way of winning the customer trust and loyalty, because it helps your customer to believe that you care about their needs and want not just their income for profit. In as much as credit sales in business can be advantageous, it can also be disadvantageous if don't excessively. Excessive credit sales in business can liquidate or bankrupts a business without the awareness of even the business manager or owner.

Excessive credit sell can lead to slowly withering of the business inventory, without having any reasonable profit of income to show for it. Most times selling goods and services on credit can lead to bad debts in the sense that customers and clients are not able to pay for the product that they have purchased on credit due to one reason or the other and of course the businesses loses.

 

[Mikes smithen]

At times business plan fails due to lack of consideration or given attention to certain factors that affect the management of such business, moreover being able to reestablish such business and manage it well depends on how far you have considered factors that affect this business. Re-establishing an initially failed business idea is not a wrong business move but you must be sure to consider all factors that can help your business grow this time around. Possibly what caused the business to fail could be because the business was established on flawed concepts like wrong location. However establishing the business on the right and better location could be a starting point for such business idea to grow.

 

[moonchild]

Credit in business can be dicey because there are business that thrives solely on credit which is the owner of these businesses collect credit to fulfill orders, these type of businesses include large others from manufacturing companies and auto industry, but other small businesses can not be sustained through giving out loan to customers because the margin is not worth it.

If you’re a small business owner you can make it a rule and inform your customers on your no credit rule, or you can make it base on merit which is basically just giving out credit to a deserved customers, based on money he’s spent or customer lifecycle.