Credit Policy Assessment
A credit policy can look rigorous on paper and still fail if sales practices, exceptions and system behaviour routinely bypass it. This assessment tests the policy against the way revenue is actually created.
Test the policy where money can leak
- Entry: how a new customer receives a limit and payment terms, and what evidence supports the decision.
- Growth: whether limits respond to larger orders, seasonality, ageing and payment experience.
- Exception: who can override a block or extend terms, for how long, and whether the commercial reason is recorded.
- Exit: what triggers tightening, suspension, security, recovery action or closure.
Look for policy–practice gaps
Silent exposure
Include unbilled work, open orders, goods in transit and disputed balances where they create economic exposure beyond the ledger.
Habitual overrides
Recurring exceptions often reveal that the formal limit or approval level no longer reflects the business model.
Unowned decisions
A control is weak when sales, finance and credit each assume another function owns the final exposure decision.
The assessment should recommend changes that can be operated: fewer approval bands, clearer exception expiry, defined stop-supply triggers, or portfolio reviews based on observed payment behaviour.