Do you have a credit control policy?

Brian O'Connor
The Basics

When we were building CreditCruncher we spent a lot of time speaking to companies researching their credit control processes.  One of the most surprising things we learned was that a large number of companies did not have a clear credit control policy.

There were various reasons why this was the case but the most common was that they simply never really had the time to draft up any formal business policies.  For many, their policies were informal and had evolved organically as their businesses grew over time. It was very much a case of “….that’s just how we’ve always done it!”.

However, there are some areas of a business where the time and the effort should be taken to makes sure the policy is clearly defined. In particular, everyone should have some form of credit control policy, otherwise, how are you supposed to know what to do when it all goes wrong?

A lot of people believe that policy documents need to be large, detailed documents that take a lot of time and effort to put together, and to be fair they can be.  But they don’t always have to be.

A policy document is often simply defined as a statement of intent and is implemented as a procedure or protocol. Or to put it another way, it sets out how things are to be done within an organisation and ensures that everybody knows what they need to do.


Most organisations have an informal set of policies and procedures on how various tasks should be done. Credit control is one of the most important functions in an organisation. It is really is worthwhile spending a little time to document your company’s position on what your policy is, who it applies to and most importantly what should happen when things start to go wrong.  It doesn’t need to be particularly detailed but it should clearly set out the rules.


Ideally, it should include the following 

  • The company’s position on credit - which customers are given it and under what circumstances?
  • How much credit should be given and under what terms? - i.e. X amount for Y days.
  • What credit checks should be taken before credit is given? - who’s responsibility is it to conduct the checks?
  • What happens when the customer doesn’t pay when they should?  - how many reminder notifications are sent and at what time intervals? - what other actions should be taken?
  • When to go legal? - at what point is the debt passed to your solicitors for recovery? - who makes that decision?


Another important aspect to consider is that the credit control policy will have an impact on a number of different departments in your company. For example, a strict policy might make it difficult for your salespeople to sell or attract new customers, whereas a policy that is too lose will make it very difficult for your accounts team to recover the debt.  Therefore when it comes to drafting the policy it is generally a good idea to try and include the impacted departments or individuals into the discussions. This will ensure their concerns are represented and more importantly their buy into the policy (and this will be very important when the time comes to enforcing it!)


So, grab a coffee, gather your colleagues and spend a little time setting out one of your company’s most important policies.

Your cash flow will thank you for it.

photo credit: Arron Burden on Unsplash

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