In implementing a credit policy the credit manager or financial accountant should establish an objective set of criteria which should address some of the following issues:-

  • Conditions of sale issued to customers (it may be that different conditions of sale will apply to different customers); if so this should be clearly identified
  • Details of payment terms.
  • Details of any cash discount to be applied.
  • Details of any interest payable to be applied to overdue accounts.
  • Whether reservation of title should apply.
  • Details of assessing how credit ratings should apply to customers.
  • At what stage accounts should be put on "stop" and actions to be taken thereafter
  • At what stage legal action should be instituted
  • Whether credit data from external sources should investigated and whether credit insurance should be taken out.