As a credit manager or the owner of a business you should be able to answer the following questions or at least know how to find these answers if you want an effective credit management plan.
1. How do debt and credit affect my business?
2. Exactly what is my credit policy?
3. What makes a successful credit policy?
4. What is credit risk?
5. How do I turn prospects into credit approved customers?
6. How can I maximize my cash flow?
7. How do I handle customer deductions?
8. How do I handle customer excuses for late payments?
9. Why would I use a third party collection agency?
Your credit management plan should answer each of those questions; you and your employees should be able to flip through your credit policy to find out what steps to take in each of those instances. Having a credit policy can help you create a plan that answers those questions and gives you a guideline and steps to take in each scenario, helping your cash flow smoothly and avoiding much bad debt and frustration.