In this guide
Why credit is normal, and risky
Selling on credit wins loyal customers and larger orders, and it is how a lot of trade works between shops, wholesalers and regular buyers. It is also the fastest way for a small business to run out of cash, because you have paid for the goods and not yet been paid for them.
Decide your policy before anyone asks
It is much easier to say no, or to say yes with terms, if you already know the rules.
- Who can have credit: only customers you have traded with for a while, or who are referred by someone you trust.
- How much: a limit for each customer, based on what they usually buy and what you could stand to lose.
- For how long: a due date every time, such as one week, two weeks or a month.
- What happens if they are late: no more credit until the balance is cleared.
Write everything down
Record every credit sale on the day: who, what, how much and when it is due. Record every repayment the same way. When both sides have the same record, disagreements are short.
Remind early, politely
Most late payment is forgetfulness or bad timing, not refusal. A friendly message before the due date works better than an awkward call after it. Sending a statement shows exactly what is owed and removes any argument about the number.
Watch the pattern
Look at how long each customer takes to pay, on average. Someone who always pays in ten days is safer than someone who always pays in forty. Let that history decide who gets more credit and who gets less.
The short version
Set limits and due dates before you extend credit, record everything the same day, remind early and let each customer's payment history decide their limit.
General information, not legal, tax or financial advice. Last reviewed 26 September 2026.