A business effectively transforms into a money lender by providing monthly accounts to clients without charging interest on that money for the first 30 days. Larger ventures that involve developing new technology or increasing manufacturing can only generate returns over the long term. If a feasibility study demonstrates that these initiatives will be profitable, a company may take on long-term debt.
What occurs to a business when it offers its clients monthly accounts?
- Thread starter Shavkat
- Start date
Offering companies account to the client is to show transparency and to ensure the client of safety.
I think before a business take such a decision they must have taken everything into account. They may actually make money in the near future from it.
This policy enables businesses to gain loyal customers. But I think most companies offering monthly accounts to clients are big businesses. Their clients are corporate clients. Businesses usually do a credit check on their clients by employing the service of credit rating agencies.
Of course the business needs to properly plan before it takes such a decision. Proper planning must be in place.
Yeah, as a business man you may not have knowledge of everything. That is the importance of employing people who are knowledgeable.
Its true that offering monthly accounts to clients without interest for the first 30 days is a common practice in the business it helps to build trust with clients and allows for a more flexible payment system but taking on longterm debt should be done with caution and a proper feasibility study to guarantee profitability in the long run.
