When you allow your customers to receive your product or service before payment is made, you are extending credit to your customers.   The decision to extend credit to your customers, how much credit to extend, and on what terms, are some of the most important decisions a business can make.  Every business needs sufficient cash flow to operate.  If your company operates on razor thin margins, poor receivables management can be the death knell.

At the same time, many businesses operate in industries where extending credit is expected.  Allowing customers to purchase on credit means they can purchase more than they would if they had to pay up front. It also tells your customers that you trust them and be the basis for strong customer loyalty.  Certainly increased sales and customer satisfaction are two of the most important goals for business owners.