Credit Policy Template - Free Download
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Sample Company's Credit Policy
Mission:
The Credit Department is responsible for maintaining a high quality of accounts receivable
while selling to all customers that represent prudent credit risks. We will provide flexible
mechanisms to protect our substantial receivable investment.
Goals:
Our goals are to limit bad debts to ___% of sales, Days Sales Outstanding to ___ days, and
receivable ageings to no more than ___% beyond 60 days. We will visit customers whenever
necessary and strive to resolve all deductions within 90 days.
Organizational Responsibilities:
The Credit Department reports to the office of Treasurer. Functions include the application of
payments, establishing credit limits, and monitoring collection of receivables.
The Credit Manager establishes limits of up to $_______ and may delegate a portion of this to
other department members. Higher limits are approved by the Treasurer or above. If credit
privileges are withdrawn from a customer, it is our policy to consult with marketing personnel in
the decision process. If a consensus cannot be reached, the situation is referred to the President.
When accounts cannot be collected with normal means, the Credit Manager recommends the use
of a Collection Agency or attorney. The Treasurer and Sales Manager approve such requests.
Credit Evaluation:
The Credit Department establishes limits for all active customers. Such limits are based on
trade information and financial statements when necessary. (See Appendix 2 for a Procedure).
The department reviews larger limits on a periodic basis. All limits are subject to revision, based
on changing levels of credit worthiness. Individual orders are referred to the credit department
when an account is over its limit or 15 days past due, and an effort is made to resolve such
problems. If satisfactory arrangements cannot be made, the order is withheld.
Collection:
We strive to have a consistent and courteous approach to collection. All customers are called
when they are ____ days past due. If no payments are received after three calls, the sales
representative is asked to contact the customer. If there is still no response, the account is
considered for legal action.
In the case of bankruptcies, the Credit Department files proofs of claim. The department
represents our company with creditor committees and coordinates activities with attorneys.
source: bcs.solano.edu
