The purpose of a credit policy is to ensure that everyone within a company understands the working procedure of credit sales, and, of course, to exhibit financial control over a contentious subject. The following policy has not been written with any business/industry/country in particular, as such, it can only be used as information and not a strict guide: albeit useful information.
Date of Issue: 01 Jul 2003
Credit Policy for XYZ Company
This Credit Policy defines the Credit Business Aims and Procedures where credit is provided to our customers/clients.
Main Highlights
Monthly Overdue Figure: £73,980 or less
Days Outstanding: 45
Credit Cycle: 65 Days
Credit Controllers: 2 (each with responsibility of 92 accounts and £36,990 balances)
CREDIT BUSINESS AIMS
Credit is used to maximize sales opportunities where:
1. Credit terms and conditions have been approved for individual customers and all customer details are complete and logged:
Credit accounts are originated by application, using our standard Credit Application Form. All accounts are individually assessed using both of the following systems: Underwriting Credit Authorities and Credit Limit and Conditions. The customer details are then updated to our computer system. The originals of both the Credit Application Form and Terms and Conditions of Sale must be retained.
2. Cash flow and financing cost permit:
The ‘credit cycle’ of our business is approximately 65 days. This is the time from gaining the sale,
