Why is it good to sell on credit?
submitted by Joe Kerr

DEEPIKA

To achieve a goal and maintain a good relationship with the customer for the long-term.

DEEPIKA

To achieve a sales target.

Miguel

For collecting interest.

Delia

Customer convenience and customer relationship.

Lorlaine

To earn interest.

Dave

To achieve a sales budget.

Reshmi

To maintain a business deal for a long time.

RJ Fletcher

There are two main advantages of selling on credit.

1) The seller ultimately makes more money, because the buyer now has to pay interest on top of the item's value.

2) It allows customers to buy things they may not be able to afford. Rather than laying out the total cash value of the product all at once, they can slowly pay for it as they get more money. If a credit sale had not been an option, that sale may not have happened at all.

There is, of course, a major downside to credit sales. If the buyer opts to make payments, rather than buying the product outright, it could be because they don't have enough money, which increases the chances that they won't have enough money in the future either.

Maybe a customer thinks, "If that job goes through and I get paid, I should be able to pay for this purchase later." What happens when things don't turn out like the customer had envisioned? They stop making payments and the seller loses out on money.

When the buyer stops making payments, the seller can send their file to a collections agency, but part of the money recovered from the customer will have to be paid to the agency, so the seller will lose out.

It is considered a risk to sell on credit, and that's why some businesses will do credit checks, depending on how expensive the product is that they're selling.