This Customer Credit Policy is for businesses aiming to balance profitability with reduced credit risk. Designed to streamline credit management processes, this tool provides actionable insights into establishing credit limits, conducting thorough customer reviews, and implementing effective credit hold and release procedures. By fostering a structured approach to credit evaluation and collection policies, it empowers organizations to safeguard their financial health while maintaining strong customer relationships.

This tool includes three samples that cater to different aspects of credit management. Sample 1 focuses on defining policies for credit holds, releases and ongoing reviews, ensuring consistent guidelines for evaluating customer creditworthiness. Sample 2 outlines a company’s approach to extending credit responsibly, emphasizing profitable sales while minimizing collection risks through rigorous credit research and annual reviews. Sample 3 delves into establishing payment terms, monitoring credit limits and conducting periodic assessments for both new and existing customers, providing a framework for maintaining credit discipline and addressing delinquent accounts effectively.

Sample procedures include:

• The regional sales managers should be responsible for granting credit to small customer accounts.
• All information must relate only to experience without referencing current credit terms and future intentions.
• As part of the quarterly review, the treasury manager should determine the customer account assignments and whether to adjust customer account credit limits.