Why is a Credit Policy Important for Entrepreneurs?
For entrepreneurs, a well-defined credit policy is essential for several reasons: 1. Cash Flow Management: By setting clear terms, entrepreneurs can better predict cash flow and avoid liquidity issues. 2. Risk Mitigation: It helps in assessing the creditworthiness of customers, thus minimizing the risk of bad debts. 3. Customer Relationships: Clear credit terms can help build trust and long-term relationships with customers. 4. Competitive Advantage: Offering flexible but controlled credit can make a business more attractive to potential customers.