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

When you write a credit policy, you are setting up what your payment policies will be.  An easy way to set up your payment policy is to determine if you will accept checks, credit cards or cash only. When do you want to be paid?  Is payment due before you begin the work, halfway through or at the end, and will you be billing people? What about discounts? Will you offer any and if yes, what will they be?  Will you offer refunds? What is your refund policy? Will you extend credit and if so, how will you check their credit?

It is important to set up a payment or credit policy BEFORE starting any work for anyone. Document all activities with the customer, including any phone calls or letters sent if an account becomes past due. Make sure to include what will happen if a payment is late in your payment policy.