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Credit Management

A successful Credit Department will have well defined credit management policies and procedures to guide them. However, a credit philosophy must first be decided upon. Generally, Management and the Credit Department must decide on one of the following philosophies:

1. Liberal on credit, conservative on collections.
2. Moderate on credit, moderate on collections.
3. Conservative on credit, liberal on collections.

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Once the basic credit philosophy has been decided, the main credit policies can be determined. These policies will generally be concerned with the following:

1. Opening new accounts.
2. Establishing lines of credit.
3. Methods of lowering risk and increasing line of credit.
4. Maintaining credit on existing accounts.

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In addition to the basic credit policies, your department must also decide on personnel issues, to include:

1. Staffing requirements, responsibility and duties.
2. Chain of command and lines of authority.
3. Sales & Operations responsibility with credit issues.