Value Proposition: Customer Credit Policy is not a “policy” document for display; it is an operational mechanism that prevents a common scenario: ongoing sales to an Overdue customer or one exceeding their limit, which then manifests as a problem in AR Aging and DSO, followed by reconciliations (Credit notes/Write‑off) under the pressure of closing. This package links customer credit limits and customer payment terms with the decision to stop sales when limits are exceeded through a single record + approval workflow + traceability from order to collection.

In 20 Seconds: What Will You Get?

• Credit Limit Template: A record of customer credit limits (Limit/Utilization/Available) with effective and review dates.
• Policy Summary: Credit and Collection Policy (Who approves? When do we stop sales? When do we raise the limit?).
• Customer Risk Assessment: Risk scoring based on AR aging/payment behavior/concentration.
• Customer Payment Terms: A standardized Terms dictionary (Net 30/45/60…) linked to classification and risk.
• Overlimit Monitoring: An “Overlimit” + “Overdue” + “High risk” list with Owner and action.
• Credit Hold/Stop-Sell: A decision template for stopping sales when limits are exceeded + a log for lifting/removing holds.
• Override Workflow: An exception form (limit increase/terms extension) with approvals, justification, and impact on exposure.

CTA linked to outputs: You will receive Credit Limit Register + Risk Scoring + Overlimit/Hold Logs + Override Approvals ready for implementation.

Suitable For

• AR / Credit Control: Operate collections and credit as a worklist (Limits/Overdue/Actions) instead of undocumented follow-ups.
• Controller / Chief Accountant: Adjust credit exposure before closing and link exceptions to approvals and impact on AR.
• Sales Ops / Commercial Finance: Standardize the “Sell/No Sell” decision based on clear rules instead of ad-hoc negotiations.

Not Suitable For

• Those seeking an automated Credit management system within ERP that automatically stops orders — the product provides the framework and records, and the application is within your system.
• Those lacking AR Aging data or payment/exposure history — a minimum of data is essential for a realistic risk assessment.

Without Credit Policy/Register / With Credit Policy/Register (Short Comparison)

Before Use: 5 Symptoms That Credit Is Managed Reactively

• A customer is overdue, yet sales continue because “no one owns the stop decision.”
• Payment terms change per transaction (Net 30/60/90) without approvals or written justification.
• No clear picture of exposure versus limit for each customer, leading to surprises in overdue AR.
• Limit exceedances occur via calls/messages with no override log available for review.
• During closing, discussions arise about “Is this customer high risk?” without risk scoring or review history.

How Is the Customer Credit Policy Practically Applied from Customer Opening to Collection?

The approach here is operational: it starts with customer data and past payment history (if available), then establishes a credit limit and payment terms with risk classification, and after implementation, monitors utilization and overdue status. Any limit exceedance or terms extension is not done “verbally”; it is done via an override request with approval, and recorded in closing files as an impact on exposure and risks.

Application Method (3 Steps)

Step 1: Preparation and Report Gathering

• Compile customer master (codes/entity/group/branch) and link it to the AR open items/AR aging list.
• Define the approved customer payment terms dictionary (standard values) and who has the right to change them.
• Establish exposure rules: Is the limit at the “customer” level or “group/parent company” level? Does it include “unbilled orders”?

Step 2: Risk Assessment + Limit Setting + Approval Path

• Run customer risk assessment: Factors such as (Days overdue history / Concentration / Disputes / Payment behavior) and produce a risk tier.
• Record customer credit limits in the Credit Limit Template with effective date, reason for the limit, and review date.
• Activate the exceptions path: Override request (limit exceedance/terms extension) + approvals + justification + duration of the exception.

Step 3: Run Follow-Up + Credit Hold + Closing File

• Weekly follow-up: “Overlimit / Overdue / High risk” list with Owner and action (collection/freezing/escalation).
• Implement stop sales when limits are exceeded as an operational decision: Open hold + close hold with documented decision upon collection/reconciliation.
• Month-End: Produce a snapshot of exposure and risks + exception and approval logs + any memos on high-risk customers to support provisioning/stop decisions.

Package Components (Clear Inventory)

1. Credit Policy (Credit and Collection Policy)
   • Practical Purpose: Define credit rules: Who approves the limit? When do we stop sales? When do we raise the limit? And when do we review customers?
   • When to Use: When operational/governance is established, then refer back to it for any exceptions.
   • Resulting Document: Approved policy document that can be referenced in reviews.
2. Credit Limit Register (Credit Limit Template)
   • Practical Purpose: A record of credit limits for each customer/group: Limit, Utilization, Available, Review date.
   • When to Use: When opening a new customer + periodic reviews.
   • Resulting Document: A limit register with effective date, notes, and approvals.
3. Risk Scoring Matrix (Customer Risk Assessment)
   • Practical Purpose: Convert “risk feeling” into a score/rating (Low/Medium/High) with clear factors.
   • When to Use: When establishing + monthly/quarterly reviews or when payment behavior changes.
   • Resulting Document: Risk score for each customer + brief explanation (Drivers) that can be saved.
4. Terms Dictionary & Rules (Customer Payment Terms)
   • Practical Purpose: Standardize terms and prevent free input + link terms to risks and collection policy.
   • When to Use: When opening/modifying a customer and when reviewing exceptions.
   • Resulting Document: Approved terms register + terms change log (if any).
5. Exposure & Overlimit Monitoring
   • Practical Purpose: Identify customers exceeding credit limits or at risk of exceeding within a short period.
   • When to Use: Weekly (or daily in high-traffic environments).
   • Resulting Document: Overlimit list + date of occurrence + Owner + action.
6. Stop‑Sell / Credit Hold Workflow (Stop Sales When Limits Exceeded)
   • Practical Purpose: Hold decision template: Who requested it? Why? What is the criterion? And when is the hold lifted?
   • When to Use: When limits are exceeded/repeated delays or unresolved disputes.
   • Resulting Document: Hold log that proves the application of the control and prevents it from being “arbitrary.”
7. Override Request & Approval (Credit Exceptions)
   • Practical Purpose: Document limit exceedance/terms extension with approval, justification, and duration of the exception.
   • When to Use: For any business/operational exception that requires overriding the policy.
   • Resulting Document: Override approvals log + impact of the exception on exposure.
8. Periodic Review Pack + Sign‑off
   • Practical Purpose: Periodic review: Update limits/risks/terms and sign-off by responsible parties (Credit/Controller).
   • When to Use: Monthly or quarterly + before annual closing.
   • Resulting Document: Review snapshot + signatures + traceable decisions.
9. Evidence Index & Archiving Map
   • Practical Purpose: Index supporting evidence (AR aging exports, approval correspondence, dispute memos) and link them to records.
   • When to Use: With every review or exception + within the closing file.
   • Resulting Document: Evidence index ready for delivery that reduces requests for “show the approval/decision.”

What Should Be Included in the Delivery?

• 01-Customer-Credit-Policy.docx: Customer Credit Policy + Definition of Approvals and Hold/Exception Rules.
• 02-Credit-Limit-Template.xlsx: Credit Limit register (Limit/Utilization/Available/Review date) + Approval fields.
• 03-Risk-Scoring-Matrix.xlsx: Customer Risk Assessment + Factors/Weights + Risk tier output.
• 04-Payment-Terms-Dictionary.xlsx: Customer Payment Terms (Terms dictionary) + Application/Exception rules.
• 05-Exposure-Overlimit-Dashboard.xlsx: Exposure monitoring dashboard + Overlimit/High risk list.
• 06-Credit-Hold-StopSell-Log.xlsx: Stop sales log (Hold/Release) + Reason + Date + Approved by.
• 07-Override-Request-Approval-Form.docx: Exception form (Limit increase/Terms extension) + Justification + Duration + Signature.
• 08-Override-Approvals-Log.xlsx: Exception approvals log + Impact on exposure + Expiration of the exception.
• 09-Periodic-Review-Calendar.xlsx: Credit review calendar (Monthly/Quarterly) + Responsibilities.
• 10-Review-Signoff-Pack.docx: Credit review sign-off page + Adjustment decisions + Risk summary.
• 11-Evidence-Index.xlsx: Evidence index (Exports/Approvals/Disputes) + Links/Paths.
• 12-Runbook.pdf: Operational run (Onboarding → Monitoring → Hold/Override → Month‑End pack).
• 13-Archiving-Map.docx: Archiving tree (Year/Month/Credit/Overrides/Holds/Evidence) + Naming convention.

After Implementation (Two Points Only)

• Operational Outcome for the Team: You will have a “case” for each customer: Limit/Utilization + Overdue + Next action, and any exceedance is managed as an exception with approval or converted to a credit hold with a lifting/removal log.
• Control/Audit Outcome: Credit decisions can be traced: Policy → Risk score → Limit/Terms → Overlimit/Hold → Override approvals → Review sign‑off, instead of verbal decisions that appear as a note of weak controls.

FAQ — Questions Before Purchase

Is the package suitable for any ERP system?

Yes. The package operates above the system via exports (AR Aging/Open items/Sales exposure) and produces records and decisions. The application of Hold within ERP is based on your settings and permissions.

Is it suitable for multi-branch companies or groups (Group credit limit)?

Yes. You can define the limit at the customer level or at the group/parent level and link branches under it, with aggregated exposure reports.

Does it include customer payment terms and their modification?

Yes: A standardized terms dictionary + rules for changing terms, and an exception workflow can be activated to extend payment terms when needed with approval.

Is “stop sales when limits are exceeded” done automatically?

The product provides the rules, decision templates, and logs. Automatic stopping depends on your ERP capabilities. Even if not automatic, having a hold log and overlimit list makes operational application traceable.

How are customer risks assessed within the template?

Through risk scoring based on customizable factors such as (Days overdue, payment behavior, open disputes, sales concentration/exposure). The goal is to produce a risk tier that supports limit decisions.

What is the minimum data required to get started?

Customer master + AR aging/open items + current payment terms + sales exposure (open invoices/orders if available). Without these inputs, the limit will be overly estimative.

Can it be linked with the AR Aging template and collection plan?

Yes. Practically: Overdue, DSO, and collection results feed into the decision to adjust limits/stop, and the credit policy provides clear escalation rules for the collection team.

Is there a form for exceptions (Override)?

Yes: An override request form + approvals log that shows who approved, why, and the duration of the exception, and its impact on exposure.

Is it suitable for B2C as well as B2B?

It is most commonly used in B2B (Limits/Terms/Collections). In B2C, it can be used if you have receivable accounts or deferred sales (or points of sale that grant credit).

Ready to Standardize Credit Decisions and Obtain a Reviewable Approval File?

Outputs: Credit Limit Template + Risk Scoring + Overlimit/Hold + Override Approvals + Review Sign‑off.