Credit Policy for businesses and how to extend credit and manage credit risk

When you decide you want to have a credit policy, you should know what a basic policy is compiled of.  When you sit down to create your policy, take these steps to ensure a quality, effective credit policy:

• Review your accounts receivables.
• Set your policies or credit limits.
• Decide on procedures you would like followed.
• Produce and distribute your credit policy manual.
• Include a procedure on updating the policy and when to update it.

Credit policies should be available to everyone in your organization, especially your collectors and sales department.