The Holiday Season is upon us and that means many of your customers are in the midst of their busiest months of the year. The years of Black Friday being a single shopping day are long gone and many stores have decided to offer deals the whole week, if not longer. This has lead shoppers to spend more than ever before and we are not even to the end of the year when many of the most popular gift-giving holidays occur.
While this may not apply to the service-side of business clients, your retail clients have most likely been investing a significant amount of money to build inventory to make sure they are ready for the holiday rush. Since it will take time for this increase in inventory to turn into cash, many retail customers will ask for special terms for the holiday season or for payment to be delayed until the end of the holiday season. Here are some things to consider when deciding how to handle these situations.
What does their History look like?
While building up inventory in anticipation of a big holiday season is great, it only makes sense if all that extra product is going to sell. If your customer has a history of strong holiday sales and has proven demand, granting them extra time in the holiday season might be a good idea. If they are a new customer or are launching something that does not have proven sales, we suggest being stricter on payment terms.
What does your credit situation look like
If you allow your customer to pay you on late terms, do you have the extra cash on hand to cover any payments you may have in the meantime? Chasing the debt after December 15 will be unsuccessful because many employees will be away for the holidays and it will be significantly easier to push payment off until the beginning of the year.
Getting ahead of the curve
Since it is common practice to allow customers to delay payment a bit during the holiday season, your customer will owe a lot of money after the holiday season. The advantage of insisting on time payment is that you position yourself in front of all of these other companies and make your payment a priority.
At the end of the day, deciding whether to allow your customer to pay late or with different terms can only be answered on a case by case basis. The important thing is to make sure you think through all of the factors and consequences of the decision and how it will affect how your business operates.