Credit businesses have always existed, thus the products or services they offer, they are able to reach a greater number of customers, especially to those who are not thrifty people. Well, they allow you a greater payment convenience and this is defined as a more accessible business.
That is why, for all companies that apply a credit system In any case, it is important that they always consider the application of an efficient credit policy.
In this way, you canensure that the money will be recovered. Well, you have to remember how important money is to the company. If a credit credit policy does not work, it simply translates into losses for the company.
What is a credit policy?
A credit policy refers to the set of strategies and rules that a specific person follows. worker in financial sector to consider whether or not you should grant a loan to a person or company.
That is, when you are going to request a loan, a person who knows all the details of the credit policy that is handled and is in charge of this area, assesses current conditions who submits an application to determine if it will be approved.
These credit policies are not general for all sectors. Well, in the financial sector, each of banks have different policies of credit. In this way, you can compete with each other by offering more attractive policies for the client.
In the same way, it happens with companies and businesses. That is, each one has its own credit policy, which is provided by the management staff of that company. In addition, it is carried out under study and taking into account many factors, in order to guarantee that it is a credit policy that does not generate losses.
Main components of the credit policy
In the first place, the main component of a credit policy is the area responsible for credits and collections. They will be the ones who manage all the responsibilities to exercise a credit policy that works.
Among his main responsibilities, is to evaluate the purpose of credit and define your numbers for the company. That is, the numbers that represent the credit rating score.
The terms and conditions of the credit are another component of this policy. These are required for determine if a customer is eligible to receive a credit through an evaluation, although it does not apply to clients who have a credit history with that company.
Likewise, they must determine the conditions by which the sale is made. That is, the parameters that fix the behavior of credit and how it can vary over time. In addition, the credit limit is included here, which also depends on the previous evaluation, as it is not the same for each client and depends on their capabilities.
A final component is the collection of overdue credit. Here are the strategies and actions to be taken to achieve the collection of credit in a fast way. Of course, without forgetting that you must maintain a good relationship with customers.
Importance of credit policy
It is not just about recovering an overdue loan. But in the whole set of strategies to consider to grant the same. Therefore, every company must have these policies, as this is how the loss of accounts receivable from the company is foreseen.
If a financial institution does not have a credit policy that regulates this area, it could get into a huge debt due to collection concepts. If this debt remains unpaid, the company could go bankrupt.
As you might expect, credit policies are among the strategies used by credit card companies to determine if a credit is approved and establish your guidelines.
So this is not an essential policy. But a strategy that must be taken into account in a mandatory way for any company or service that sells on a credit basis. So, offer customers a more accessible payment, which ensures greater growth in sales. Without forgetting of course, the considerations that must be made to evaluate any client before granting a loan.