Credit Policy Review Checklist
How to review and refresh your business's credit policy so it still fits your customers, your cash flow and the risks you face — and so your team actually follows it.
What this checklist covers
- Confirm the policy still matches your business and risk
- Check approval authorities and limits are working
- Close gaps the policy has left exposed
- Make sure the team understands and follows the policy
7 min
Before you start
A credit policy that nobody reviews drifts out of step with reality. Gather your current policy and the evidence of how credit has actually behaved before you sit down to review it.
- Your current written credit policy.
- Recent bad-debt and aged-receivables figures.
- A sample of recent credit approvals to test against the policy.
- Feedback from the people who apply the policy day to day.
Step 1 — Check the policy still fits
- Confirm the credit-application and verification requirements match what you actually need now.
- Review the credit-limit framework against current customer sizes and risk.
- Check the security requirements — when guarantees, deposits or PPSR are required.
- Confirm payment terms and late-payment provisions are current and fair.
- Make sure the policy reflects any change in your industry or customer base.
Step 2 — Test controls and authorities
- Confirm who can approve credit and at what limits, and that those authorities are respected.
- Check approvals are documented with the evidence behind them.
- Test that limits are actually enforced when orders push past them.
- Review how overdue accounts are escalated and stopped.
- Compare bad-debt outcomes against the policy to spot weak controls.
Step 3 — Close gaps and embed it
- Update the policy to close any gaps the review revealed.
- Clarify wording where staff have been unsure how to apply it.
- Re-issue the policy with a new version and date.
- Brief the team and confirm they know what changed.
- Set the next review date so this does not lapse again.
Common mistakes
- Writing a policy once and never revisiting it.
- Having authorities on paper that nobody actually follows.
- Not enforcing limits, so the policy is theoretical.
- Failing to learn from bad debts that the policy should have prevented.
- Updating the policy but never telling the team.
A living credit policy is one of the cheapest ways to protect cash flow. The Merion tools support consistent credit control, and a free debt appraisal helps when a policy gap lets a debt slip through. This is general information, not legal or financial advice.
Key takeaways
- Review the policy regularly so it keeps matching reality
- Authorities and limits only count if they are enforced
- Learn from bad debts to close real policy gaps
- Re-brief the team whenever the policy changes
Frequently asked questions
How often should I review my credit policy?
At least once a year, and sooner if you suffer unexpected bad debts, change your customer mix or grow significantly. A policy is a living control; reviewing it keeps it aligned with the risks you actually face.
What is the most common credit-policy weakness?
Limits and authorities that exist on paper but are not enforced in practice. A clear policy means little if salespeople approve credit they should not, or if orders sail past limits without a stop. Enforcement is everything.
Should small businesses even have a credit policy?
Yes, even a short one. A simple, written set of rules on who gets credit, how much and on what terms brings consistency and protects cash flow. It does not need to be long to be effective; it needs to be followed.
Work the checklist, then get paid
Use the free Invoice Generator, then let Merion recover anything that goes unpaid — commission-only.