Corporate credit managers have an old saying to the effect that it’s not really a sale until you put the money in the bank. There is some truth in that. Lots of things can happen to that shipment while the receivable is still outstanding. The customer can refuse to pay for a variety of reasons — say, a dispute over the quality of your craft widgets or the specific patterns ordered. Or maybe there’s no money to pay you with, after taking that buying trip to Tahiti. A death in the family, or a check that’s truly in the mail, but lost. The list is endless. Suffice it to say that all businesses need a good handle on their policies and procedures here. What good does it do you to ask for COD on the initial order, and then ship reorders on open account? That doesn’t tell you anything. What will give you a good feel for this customer’s payment habits is to ask for several references from other makers in the crafts industry — and then actually take the time to check out those references. Or invest in a membership in a credit reporting service, such as the Manufacturers’ Credit Cooperative.
