Most businesses loan money to their customers. This is known as debtors, and this is standard business practice. The only difference between bank loans and debtors is that banks get paid interest on the money they have lent.
It is often not the lack of profit flow that has caused these failures, but the lack of cash flow caused by poor and slow payment by customers.
Selling to the big and well-known names may look good for Public Relations purposes, but they are often the worst offenders, and because of their larger purchase volumes, they would often have squeezed the sales manager on price to such an extent that the gross profit margin is much less than normal.
With all these difficulties, why sell on credit? The reason is to facilitate the sales process, and as an inducement or aid in marketing of the goods or services of the seller. Because all other sellers give credit, you would find it impossible to sell if you do not do likewise.
I am Peter, a blogger, SEO and social media person who has an interest in E-commerce, ERP and CMS systems. You can contact me by e-mail: kaizenlog@gmail.com
