What Is The Objective Of Credit Policy?


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Tash Naz , Freelance Writer, answered

There are many objectives of a credit policy which are clear guidelines that outline the terms and conditions of various financial transactions.

Some of the main objectives of a credit policy are as follows:

  • Standardisation
A company will be able to remain consistent in their policies that they outline in their credit agreements with a customer.  Standardisation helps to build trust between the financial institution and customer and therefore enables more profitability in the future.

  • Scope for Management Training

Credit policies can leave scope for more training on a managerial level which can be invaluable if a manager was to leave the company

  • Expectations
Credit policies main objectives also include ensuring that the expectations of an organization is met and in compliance with the credit department.

  • Adjustments
Credit policies leave room for the evaluation of decisions relating to credits i.e a loan. A credit policy can work as a go between to ensure that a loan is met or adjusted according to the customers individual circumstances.

I hope this helps to answer your question.

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