For many small businesses, selling on credit is a major strategy for achieving increased sales and ensuring customer loyalty. This strategy if not properly managed can lead to huge losses and possible liquidation of the business.

There is therefore a need to set clear guidelines on credit sales that will help minimize the exposure of the business to bad debts whilst improving its cash flow. This is known as credit management. The following steps should be considered by a small business intent on offering credit directly to its customers.

http://smallhomebusiness.suite101.com/article.cfm/how_to_sell_on_credit

Nice write up, but how do you incorporate panalty for late payment to a credit sales when operating in a buyers market.

Credit sales are normally given in a buyer's market to encourage sales.