For every credit business, customers are the ones that lead a firm to succeed. A credit business cannot function well if they do not have any customers to offer credit to. Because they have all the purchasing power, you must employ better solutions that can enable you to attract more customers. Even if you gain customers, you must understand that they should be creditworthy. Using tools and platforms powered by AI such as Accelitas can help you offer better credit for customers so that you can gain more good quality conversions.
Regardless of the kind of business industry you are in, you will find competition everywhere. Choosing not to adapt to the changing times may make you lose customers in an age where your competitors are rapidly taking advantage of the advancements. If customers are being given credit terms by other companies, they will naturally prefer that company over a company that functions on a cash basis. If you are planning to venture into this journey, you must be aware of the pros and cons it tags along.
Pros of Offering Credit
Following are the benefits of offering credit.
Be Part Of The Competition
To exist in the competition in the credit business industry, you must first be a part of it and this is possible when you start offering credit. Because your competitors may be driving huge sales through the credit they offer to customers, not doing so may hurt your company’s growth. To progress further, you might also consider giving discounts to your customers as this will make them consider your firm more.
Boost Your Sales
A large part of how your company may progress depends on whether your competitors are offering credit terms or not. If they are, you may have to work harder to increase your sales but if they are not offering the same, you can boost your sales if you offer credit to customers because, in today’s cashless world, customers will not prefer a firm that requires cash payment.
Customer Loyalty
Offering and taking credit to rely heavily on the foundation of trust. When you offer credit to your customers, it will show that you trust them to repay the credit in time without any delay. This trust may lead them to pay the credit duly and they may also want to keep buying from you. Hence, this will establish loyalty between you and the customer which is highly necessary if you want your business to progress and your customer base to grow.
Cons of Offering Credit
Offering credit can help you attain the benefits mentioned above but on the flip side, you must be aware of the cons of offering the same.
Taking A Risk
Offering credit to a customer requires the customer to be creditworthy and you cannot simply rely on them without researching their credit history. You must try to gain some references of the customer’s credit and get hold of a report of the customer’s business credit too. Unless you are sure that the customer is trustworthy, you will be taking a risk by offering credit to them.
Increased Bad Debts
One of the most common issues you will have to face when offering credit to customers is that you will witness an increase in bad debts. Even if you have ensured that a customer has a positive credit history, they may eventually increase the debt and it may keep piling up.
Disruption In Cash Flow
It is quite evident that if you offer credit, you will face a disruption in your cash flow because you will not be receiving prompt payments and this may lead your cash flow to be impacted negatively. When you offer credit terms, you will have to wait for the entire duration for the credit to be paid and this means that you will not enjoy a constant cash flow.
Despite these cons of offering credit, it is a mandatory strategy if you want to retain your customers. Competitors are everywhere and if you do not want to lose your customers, you have to take the plunge and risk offering credit for customers if you want to retain them.
9 Tips To Offer Amazing Credit For Customers
Offering credit gives you a competitive edge over other companies but you must also ensure that you have a good cash flow so that you can have better credit management. Here are some tips that can improve your credit for customers.
Tip 1: Understand Your Customers
Having a good connection with your customers is the most crucial thing you must consider when you are offering credit. You must research their credit history details and figure out if you can have confidence in them to repay the credit in time. Unless you know who you’re working with, you won’t be able to offer better services to them and you won’t be able to improve your workflow either.
Tip 2: Look For Creditworthy Customers
These days, finding creditworthy borrowers has become relatively easier than before. You can easily use a good accelerated insight platform that can help you obtain data through which you can identify and predict creditworthy borrowers. Using predictive analysis, you can predict credit risk.
Tip 3: Use Ai Lift
In today’s age, using tools facilitated by artificial intelligence has become essential as they automate most of the work and grow your workflow efficiency too. Designed by Accelitas, the Ai Lift, is a credit risk service that offers frictionless solutions to both lenders and borrowers fast and fair.
Tip 4: Use Alternative Data
In traditional credit reports, the data you gain from the customers is limited but through alternative data, you can learn more about creditworthy customers. You can use Accelitas’ Credit Risk Service which is powered by artificial intelligence to evaluate the most creditworthy customers amongst the various applicants.
Tip 5: Get Some Consultation
These days, you have ample platforms that give you better clarity about the kind of customers you can offer credit to. Getting consultations from platforms like Accelitas gives you better retail consumer financing access and can help you offer credit safely as well as help customers access the credit they need.
Tip 6: Identity Verification
In the first tip, emphasis was laid on understanding your customers and one way to do so is by verifying their identity in real-time. This can eliminate any cases of fraud, rejection, or possible abandonment.
Tip 7: Account Verification
Much like identity verification, verifying the customer’s bank account is equally necessary if you want to improve your credit for customers. When you have validated their account, you can enjoy frictionless and faster transactions.
Tip 8: Learn Through Competition
Your competitors may annoy you but keep in mind that they are the ones motivating you to work harder in actuality. Because you want to stay ahead of them, you will be eager to adopt practices that will grow your company. Hence, they are some of the best sources to learn from. Look for strategies they are using that are enabling them to progress and try to implement the same but also look for practices that have not worked for them and try to avoid the same.
Tip 9: Warning Signs
When it comes to offering credit, you cannot turn blind to any signs that may indicate a customer may not be creditworthy. Keep a check on these customers because if you neglect them, they may damage your company and your cash flow too.
Final Thoughts
To keep your company from failing and to gain a higher customer base, you must offer credit for customers but at the same time, you need to employ the tips mentioned above if you want to keep your company not just successful but safe too.