The global economy may be entering into a period of a new growth. Many SME, Banks, Firms and individuals are in need to either start a new business or expand the existing business. The oblivious source of income that may be used to finance their projects is the acquisition of loans. Therefore if you are a lender or you intend to be one in the nearby future, you can manage credit risks by:
5 simple ways to Manage your Credit Risk
Through checking a customer new credit record
Checking your customer new credit record or previous one may help you to know types of people who borrow from Peter to Pay John. If you are a newbie n the game, finding the credit records scores may post a huge challenge. However, you can request for credit information from local investing firms. You may also visit Government lending institutions and access data of all the loan defaulters. However, you will have to first pass the government and the local investing company checks and meet their terms and conditions.
You can build an excellent customer relationship
Be interactive with your customers and win their hearts. From that very first moment that the customer makes his first purchase into your business, you encourage him or her to buy more of your goods, provide after sales, services and other vital business and personal advice. By doing so you will be able to ascertain the amount of money spent by each customer and his/her possible monthly income. This may help you in lending amounts of cash and goods that the customer can be able to pay.
You can come up with standards for managing overdue accounts
You can develop effective measures that will ensure that overdue accounts are effectively managed. Check this, dealing with an issue at the onset will be vital instead of waiting the issue to pile up then coming up with a solution later. You may choose to either factor out methods as it will enable you to evaluate effectively.
Using credit insurance
Insurance may put you back to the financial position you were ago before the occurrence of a given risks. You can choose to ensure your business or company against bad debts and non-payments. However, there are a lot of insurance companies around the globe that it will jot down to you choosing an excellent insurance company that is pocket-friendly and can offer excellent coverage against your risk.
Through establishing credit limits
Setting credit limits to new customers and established customer will enable you to manage credits effectively. You may seek advice from well-established businesses that have experienced periods of rapid growth. You can bank on bank reports, credit agency reports and audited financial statement
Make sure that you develop efficient credit terms agreement that will highlight when how and what action should be taken before if the clients don’t meet the agreement.
In conclusion, managing credit is a vital part of your business success. If the process if effectively done, you may experience a rapid development growth.