When Credit’s Due

 

It’s often over-looked, or forgotten, and rarely considered a problem, but customer credit can be as much of a threat to your business, as bad debt.

We all know the dangers of debt, which, if left too long, can bring your business to a grinding halt. However, it’s a problem we know how to tackle, and a phone call here or there can normally see the debt paid. No harm done.

For golf retailers, it’s customer credit accounts that do really hurt business. “It’s common for golf shops to offer credit to customers”, says Crossover’s Matt Peace, “and I see many retailers who actively promote it. That’s okay if credit accounts are managed properly, but if not, they can really come back to bite you”.

 

 

“Unfortunately, it’s too easy to forget about credit and let it build up. Then, a year or so later, a customer comes into the shop and uses the £300 pounds on his account to buy some new clubs. But you’ve already spent the money on new stock, and now you have to take the hit”.

PGA Pro, Derek Wright, from Hamilton Golf Club, is reviewing how the pro shop manages customer credit accounts, “It’s the Winter months that can be worse for customer credit issues. When you aren’t making as many sales, and then a customer comes in to spend a lot of his credit, it hurts!”, says Derek.

“We are a private members club, and so medal winnings are generally put onto the customer’s account, which is fine as I’d rather they spend it with me than in the restaurant. The regular members tend to use their credit and keep it turning, which is important, but it’s the less-frequent customers who often have the highest value on their accounts, and then forget it’s there”.

 

Here are our 4 tips for managing customer credit:

1. Encourage customers to spend the money on their account at point of sale.

 

2. Keep an account for customers’ credit which sits separately to your general business account. That way, it shouldn’t touch your bottom line.

 

3. Put an expiry on accounts. If you decide to start this, it’s an idea to email reminders, and ensure customers know when they open a new account.

 

4. Make sure customers receive regular reminders with their account balance. Use your epos system to do this. They might be shocked when they see the balance!

 

“For me, the way forward is sending reminders to my customers with details of their account balances.” says Derek, “I use my epos system to generate these emails and it’s a great way to remind them to come back and spend it. Also, encouraging customers to use their credit when they’re at the till will hopefully keep it turning over and avoid the credit building up to be a problem for the business”.