What Is The Objective Of Credit Policy?

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What Is The Objective Of Credit Policy?

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Answer 1

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.