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A Credit Policy For You

In order to ensure future success, a company should establish a written credit policy for managing their accounts receivable from the date of sale or service rendered until the account is collected.   When accounts go delinquent, an established collection program will be the pathway to getting your accounts paid.

Most of your customers will pay as agreed while others will pay once they receive a mild reminder. However, some customers will not because of any number of reasons. These are the debtors that our collectors will follow up with. Although this is usually a small number of debtors that require collection agency intervention in your portfolio (usually 10% or less), the reality is that any money not collected means money your business has lost.

With the downturn prevalent in today’s global economy, time is of the essence in placing an account for collection. The single most important reason you do not want to wait too long before calling a professional collection agency like the Cayman Islands National Credit Bureau is simply because the older an account becomes, the lower your chances of recovery and the less you will have to take as a settlement on the account. Once an account receivable ages 30 to 45 days past its due date, it becomes critical to take proactive actions. Below is a graph prepared by the United States Department of Commerce showing the effects of aging on debts.

Chart

As a complimentary service for your business, the Cayman Islands National Credit Bureau has prepared a sample Credit Policy Handbook to help you develop a written Credit Policy for your business to ensure its future success.  Please find the Credit Policy Handbook below:

Download the PDF document here for : Credit Policy Handbook

Download the PDF document here for : Credit Policy Handbook – Executive Summary

One of the most important parts of a Credit Policy is the detailed credit application form with terms and conditions.  CINCB does not represent that the sample Terms and Conditions in these documents are all inclusive or complete as it relates to your business so please consult with your attorney to develop a complete terms and conditions section for your business.  Please find below a sample credit application form for Individuals applying for credit with you and a sample credit application form for Businesses apply for credit with you. These documents are in MS Word format for your ease of use and modification.  Click on the link below and click Save to save to your computer.

Download the MS Word document here for : Sample Credit Application (Individual)

Download the MS Word document here for : Sample Credit Application (Business)

In the event you are considering a credit application from a prospective customer who is a registered business, you should also consider getting the owners of the company to sign a personal agreement wherever possible.  The reason for this is that in the event the business is no longer able to meet its financial obligations to your company for whatever reason, you can then get the owners of the company to fulfill the obligations.

Download the PDF document here for : Sample Personal Guarantee

Please note that your use of any document on this site is given for information only.  Please consult with an attorney before using any document on this site as CINCB is not responsible for your use of any document on this site.


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