What Are Some Best Practices for Managing Credit Risk?
Entrepreneurs can adopt the following best practices to manage credit risk effectively:
Diversify Revenue Streams: Reduce dependency on a single customer or market to mitigate the impact of defaults. Negotiate Favorable Terms: Establish clear and favorable payment terms with customers and suppliers. Use Credit Insurance: Protect against potential losses by purchasing credit insurance. Maintain a Cash Reserve: Keep a reserve of cash to manage short-term financial disruptions. Leverage Technology: Utilize financial management software to track and analyze credit risk.