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The importance of a written credit and collection policy and procedure manual.(Credit Basics)
Many companies do not have a written credit policy. There are a variety of reasons for fills. Perhaps the most prevalent is the belief that a written policy is more trouble than it is worth, or that once completed, the policy will quickly be forgotten or ignored. But among the benefits of a written policy are that the policy will reduce bias and subjectivity in the credit decisions being made, the process becomes more predictable (something sales and senior management will appreciate); and since everyone understands the ground rules, exceptions will be made based on business considerations.
Advantages. There are a number of advantages/valid reasons for investing the time and effort to develop a written credit policy. Among the more important reasons are:
* A written policy is one way to ensure continuity in the department in the event that key personnel leave the credit department.
* A written policy helps ensure consistent credit decisions--meaning that all customers will be treated fairly.
* It can he used as a training tool.
* It can be used to help evaluate or benchmark job performance against established standards documented in the policies mad procedures manual.
* The manual can be presented to senior management to ensure consistency between credit department operations and management's expectations.
- Credit department structure and policy-making: rethinking the basics for a...
- Magazine article from: Business Credit Scherr, Frederick C. February 1, 1996 700+ words
...how to structure the credit department and formulate credit policy so that the department...occur in structuring the credit department and making its policies...maximizing sales and the credit department responsible for minimizing...
- Is it time to review your credit policy?
- Magazine article from: Business Credit Bukics, Rose Marie L. February 1, 1993 700+ words
...possible for your credit department and sales and...issues in mind: * Credit policy must be viewed...Although the credit department is charged with...implementing corporate credit policy, it does not...relationships. The credit department is ...
- Credit policy basics.(Small Business Corner)
- Magazine article from: Business Credit Barron, Jacob January 1, 2007 700+ words
...business credit. A credit policy is a set of guidelines...to make a change. Credit Policy The following is an example of a solid credit policy. Yours might be a...a good start. The credit department shall function under...
- The new role of the credit department.
- Magazine article from: Journal of Commercial Lending Drake, Blair V. July 1, 1993 700+ words
...practices of the 1980s are credit policy tightening, streamlining...redefine the role of the credit department and the credit administration...usually responsible for the credit department, loan policy development...from loan production, the credit department is the ...
- The credit department thrives at T. Talbott Bond. (T. Talbott Bond Co.)...
- Magazine article from: Business Credit Owings, Julie A. January 1, 1992 700+ words
...vice president. Credit Department Is Vital The credit...partially for the credit department. Meeting Goals...instituted a new credit policy which requires customers...Pratt states. The credit department is also trying to...
- Is your credit department the best it can be?
- Magazine article from: Business Credit Schmidt, David January 1, 2004 700+ words
...ambiguity, both within your credit department and throughout the broader...things is having a written credit policy and having a departmental...with them to go through the credit policy so they know what we expect...them. By having a written credit policy, it is easier ...
- The nineties' credit department.
- Magazine article from: Business Credit Tursman, Cindy April 1, 1993 700+ words
...more centralized credit department that reports directly...Clearly, no credit department is entirely centralized...administration of credit policy. My experience...a decentralized credit department maintained better...
- Practical "best practices" to integrate benchmarking into the credit...
- Magazine article from: Business Credit Gahala, Charles November 1, 2007 700+ words
...to identify focal points for improving credit department operations. But the practical obstacles...containment simply leads to downsizing the credit department, then the credit department could become understaffed. Here too...
- SunTrust's quality of credit "is not strained": an interview with Bill...
- Magazine article from: The Journal of Lending & Credit Risk Management Foster, Beverly October 1, 1998 700+ words
...Administration and chief credit policy officer for SunTrust...each of classroom, credit department, and line experience...responsibilities as senior credit policy officer, and at the...dual hats as chief credit policy officer for both the...
- Credit policy: the anchor of the credit culture.
- Magazine article from: Journal of Commercial Lending Mueller, P. Henry July 1, 1994 700+ words
...based primarily on analyses of cash flow. In days gone by, a strong credit culture pervaded the industry, and a bank's credit department consisted of personnel of seasoned strength and experience. To use a baseball analogy, most credit departments had a...
Source: HighBeam Research, The importance of a written credit and collection policy and...