What Does Inflation Mean for Credit Lending?
Are you a creditor?
Have you noticed increasing late payments from your customers?
Inflation and interest rates in the United States began increasing in 2021. While they’re decreasing now, they’re still affecting businesses. Inflation has been making credit lending more unstable and higher interest rates make borrowing money riskier.
What Does Inflation Mean for You?
- General business expenses cost more
- You may have to increase your prices
- If you buy materials for your products, you may have to purchase less, or find cheaper alternatives
- You may have to restructure your buying, inventory, and production habits
Inflation also affects your customers!
How Inflation Affects Your Customers, and You by Proxy
Your customers are also going through these struggles. If they run into cash flow problems, it’s possible they’ll choose not to pay you. This causes a cash flow problem for you!
If they don't pay their bills, you can't pay yours!
What Can You Do to Avoid Nonpayment?
The most important thing you can do to avoid nonpayment is make sure your credit risk management and billing systems are organized and running smoothly. Make sure your customer is trustworthy and in good financial standing before working with them. Send invoices on time with clear payment terms and tell them exactly how to pay. Don’t let them find excuses to not pay!
A customer may ask for extended credit. Don’t extend credit for them if they aren’t consistently paying on time. Keep in close contact and remind them you’re expecting their payments. If the payment terms state that the due date is in 30 days and you haven’t received payment in 20 days, give them a call! You can also offer incentives for paying early, such as 2/10 net 30 terms that give the customer a 2% discount for paying within 10 days.
Commercial Collection Agency in Michigan
At the first sign of nonpayment or payment disputes, call RSD, a commercial collection agency in Michigan.
RSD has been collecting with empathy and kindness for over 45 years, helping businesses like yours get the money you deserve!
Give us a call at 248-370-8160 or fill out a claim form today.
