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Bryan,
Yours may be the right way if you don't sweat a small loss. The time spent in compliance with every client, and the business lost, may be a greater expense than the occasional jerk.
At one point Sears loosened their credit policies to a allow a greater percentage of default. They reasoned that the lost sales from less than top borrowers was far more expensive than their bad debts.
But for those that would emotionally blowup at being stiffed - the paper work is probably necessary.
enjoy life
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