Creating a credit policy is a crucial step for any business in the construction industry. And, knowing exactly where to start when creating a credit policy from scratch can be a daunting task. Here's a great tool that can kickstart a credit policy: Credit Policy Sample from Levelset.
Every business' credit policy will be different, but the basics are the same
Now, that's just a helpful jumping-off point. Every construction business is different, and an extremely detailed policy might not always be required. Still, there are some principles that should come into play when creating a policy, which we discuss here: 10 Things to Consider When Writing A Credit Policy.
But, at it's heart, a credit policy is really just a combination of the following:
-creating credit goals,
-a gameplan for making decisions on creditors,
-a playbook for evaluating new customers' credit,
-plans for mitigating the risk of nonpayment and securing debt, and finally
-a set of guidelines that contemplate when certain recovery actions (like filing a mechanics lien, sending a debt to collections, or taking to the courts) will be taken.
I hope this has been helpful. Here are two additional resources that will be helpful in creating a policy that's right for your business:
(1) Credit Policy Basics(2) What Is a Credit Policy – And How Do I Make a Good One?
The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the helSee More...See More...
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