How to Sell More on Credit Copyright © Jude Elile, the small business helper
Now I am certain that I have struck a controversial rock and before you join the “It can’t work”, “It’s a bad business strategy”, “that’s what killed my business” or what have you; I will implore you to exercise some patience as did I this fateful 14th day of April, 2011, in the City of Ganta – Nimba County, Liberia. I honored a group invitation to anchor a training captioned ‘Economic Empowerment Workshop through Building Viable Small Businesses’. The workshops were to be held in the cities of Monrovia and Ganta; both in the Republic of Liberia and on this said day, having delivered more than half the training, I decided to interact more on a one-to-one basis with some participants at the Ganta Workshop.
One of those I was privilege to chat with during the break session was Mrs. Boas, owner of Bowba INC. a small retail business that’s focused on sales of shoes, bags, wrappers and slippers. She started Bowba Inc on a very low budget and confirmed having to carry her goods to homes, offices and target market places in order to make adequate sales for the business to stay alive and grow. Midway into listening to this passionate small business owner, she disclosed one time-tested credit sales method that turned her business around for good – she now runs a kind of corporative ‘Cash Lending Services’ that currently loan $2000 USD to borrowers for specific project in the Nimba County. This credit sales method is presently in use by Banks and a Telecom company in Nigeria for their retail businesses, and I am bent on expounding same to your home or small business success.
Here’s the summary of this proven income generation method through credit sales she disclosed to me: Sell on Credit to Established Company’s Salary Earners.
Over the past 6-Months, November 2010 to April 2011, the company I lead as Director Sales & Business Development, executed three sales campaigns with the following stunning results: 6 – 7 of every 10 prospective customer’s feedback indicated strong interest to buy on a credit arrangement, which is to pay on installment. On the average, there are about 65% credit customers saying ‘we will buy if you’ll sell on credit’. This is beside cash customers whose core interests are product quality and value added benefits they look forward to receiving upon full payment for our technology products – New Laptops. Would you not rather harness this pool of customers for your business profit?
HOW CREDIT SALES WORK IN PRACTICE
This is often a business-to-business or business-to-secured salary earners strategy of sales. And if I can hear you right, it’s that simple and feasible just that you’ll need to dot some “I”s and cross a few “T”s as per due process. Here are things you will need to do:
i. Determine, from your business Cash-Flow, what the maximum amount and the average length of credit you are capable of giving to the would-be customers – government ministries, establish companies and secured salary earners.
ii. Be sure to obtain a simple sales/purchase agreement after a down payment not less than 20% has been made by the prospective customer. If you are using a sales invoice in place of an agreement, make sure terms of sales are clearly and precisely shown in the quotation: list of items, unit price and credit length or credit payment dates.
iii. Work at receiving monthly payment for credit sales directly from the Accountant who is responsible for preparing or paying the prospects monthly salary. Please remember, do not compromise any of these precepts.
iv. Create a monthly collection procedure time-table with list of all customers whose settlement is due and follow through on the collection to the letter.
CAUTIONS TO EXERCISE BEFORE SELLING ON CREDIT
Increasing monthly sales and subsequently growing your home or small business this way, requires that you stir on some supportive value systems. These will ensure that in practicing, you don’t fall into some peculiar cash-traps like debts, delays and bankruptcy.
a. Do not fail to present the product invoice immediately goods are delivered and ensure the customer signs duly, acknowledging that his/her company or ministry Accountant should deduct the agreed sum from his/her wages or salary and pay you directly as is appropriate.
b. Do not fail to be politely firm but insistent in your collection routine, be it weekly or monthly.
c. You must strongly re-affirm to all your sales staff or representatives that “it’s not sold until it’s paid for”.
Conclusively, note that aside the short fall that credit sales can be somewhat complex to administer because of documentations involved, its equivalent to providing funding for your esteemed but loyal customers. So, don’t overlook the fact that you ought to factor in cost of fund per month or, at most, for three months into your unit price. Also, an important bonus is that credit sales, when executed as advised herein, provide high level of customer information as a basis for direct marketing, like SMS and email.
To your success!
Hey very nice article thanks for sharing with us... As a bank employee i have seen most of the people are facing the many problems to get a loan, This Small business funding will really helps them a lot to get loan faster and easier and the way you are explaining is good and very clear keeps going
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