Pre-evaluating customers

Tips on offering credit to customers.


Payments is where things become clear on whether you've done your proper job pre-evaluating customers, says Dave. It's as bad to shoot too low as too high, he said.

"I know I've lost some money, but it's OK to lose some money because this business is based on giving credit to those who are not necessarily credit-worthy. ... If you shut a new customer down at $50 credit for fear of losing money, you may be missing out on even more. Most customers are probably credit-worthy to a couple hundred dollars—at $50 you just shot yourself in the foot.

"Most guys have at least $20 a week to spend," Dave said. "Now, if I give him a $100 bill, and he can't keep up with $20 a week, I know where his credit is—less than $100. ... But if the tech comes back with $50 the next week ... I know I can start moving up his credit line.

"If you know how much your customer is worth, you don't have to worry as much about loss," Dave said. "As long as a customer pays you the appropriate amount every single week, that customer can never owe you too much money."

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