The disadvantages of selling on credit?

Selling on credit has the disadvantage that you only receive a part of the value of the goods up front in the form of a deposit. If you offer no deposit terms of course, this means you have no money coming in up front. Whilst the attraction of increasing your profits by means of interest charged is clear, you have to allow for the fact that not everyone will pay in full. Provision for these bad debts has to be made, reducing the value of the interest you earn unless this can be built into the rate. How ever good your credit checking procedures are, peoples circumstances can change leaving them unable to pay. Inflation can also reduce the value of the return you make over an extended period.