Your Credit Policy: Writing, Implementing, and Maintaining

Right or wrong, credit policy is the organization’s rule book for its credit risk management strategy and also reflects the organization’s credit culture. Both the market and the regulatory agencies expect the credit policy to be accurate, current, and succinct so that both line and credit have unambiguous and clear direction on how to identify, evaluate, underwrite, approve, book, and monitor creditworthy clients.

A well-written, well-implemented, and regularly updated credit policy is essential for protecting an organization’s financial stability, minimizing risk, and ensuring smooth operations in accounts receivable management.

Writing a credit policy involves defining clear guidelines on eligibility, payment schedules, interest rates, penalties for late payments, and credit limits. It requires a careful balance between offering competitive credit terms and protecting the company from potential defaults or bad debts.

A well-crafted credit policy:

• Focuses the organization—everyone on the same page
• Reduces organizational conflict and confusion—priorities
• Minimizes the need for rigid controls
• Supports commitment to the organizational vision and mission

Good credit policy derived these benefits. Attending gives you the tools to create a robust credit policy that protects your organization’s financial health, ensures compliance, and fosters customer trust.

Participants will learn how to:

• Diagnose their credit policies to identify gaps, and if so, how to write practical and understandable policies that meet regulatory expectations for content.
• Implement and maintain the processes and procedures needed to ensure that their policies are kept current and accurate
• Monitor compliance with policies employing tracking exceptions to policies and resolving the reasons for the deviations

• Basic topics and contents of credit policy
• Content expectations of regulatory agencies
• Tips on how to write credit policy
• Examples of typical credit policy guidance
• Credit policy standard format
• Policy exceptions and their role in credit risk management
• Indicators of the possible need for revision of credit policy

A credit policy is a key document that outlines the terms for extending credit to customers, including credit limits, payment terms, and procedures for assessing creditworthiness. It helps businesses manage financial risks, ensure timely payments, and maintain healthy cash flow. Writing an effective policy requires balancing competitive credit terms with risk protection, while implementation involves clear communication across departments and automating processes to reduce errors.