Credit Policy
A documented set of rules governing how a business grants, monitors and collects credit, from onboarding through to recovery.
What it contains
A credit policy is the rulebook for the whole credit function. It covers who may approve a credit limit, what checks are required, standard payment terms, the collections timeline, and the point at which an account is referred for recovery. A clear policy keeps decisions consistent and defensible.
Why have one
Without a policy, credit decisions become ad hoc and exposure creeps up. A written policy lets staff act quickly and reduces disputes, because everyone follows the same steps. Review it annually and keep it aligned with your cash-flow planning.
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