This is the second part of the "Making Payment Collection Easier for Your Home Business" post.

Keep the Cash Flowing

• Are you considering whether you should extend credit? You may have little choice, especially if your market is not always ready with cash. All you need to do is determine who can get credit and who should not. Extending credit may not be important for sales on goods and services that are less than a hundred or so dollars. You may need to be concerned about extending credit, however, for much larger sales that could impact your profits.

So what should you consider when contemplating on who to extend credit to? Study the customer asking for credit. Is this person deep in debt, or in a temporary unfortunate situation? Can the person pay the credit off eventually? If you feel and find that the customer cannot pay or will be unwilling to pay in the future, then forget about being discreet - you are considering the life of your business, so do not extend credit at all.

• Issue an invoice when the goods are delivered, or if your service is completed. In an invoice, the terms of payment should be well outlined and clear, and the due date of full payment should appear. You should also state penalties for late or incomplete payments, or discounts if payments are made early. This will allow you to settle your accounts better and keep track of your profits.

• If your customer claims that he or she sent a check through the mail, ask for all mailing details, as well as the check number. You can cross check this check number at the bank and find out if the check was made or mailed at all.

• Do not be afraid to contact customers when you find that an invoice is overdue. Call a customer or visit that person; if he or she is not around, make sure that you contact someone who can speak with them. Leave unambiguous voice mail that should tell them to call you immediately.

Although you are keeping your business living and intact, you should also understand that some of your customers might be in an especially sticky situation which they cannot get out of too easily. Be courteous and polite whenever you collect payments, but be firm and show a sense of urgency when you ask your customer to pay up. As honey attracts more bees than vinegar, a pleasant personality brings people to your side more than an arrogant one.

If all else fails and the customer never pays, then never grant credit to the customer again. Know your rights and consult a lawyer for more information.