What is Credit Policy?

Credit policy means the decisions with regard to the credit standards, i.e. who gets credit and up to what amount and on what specific terms. The firms credit policy influences the sales level, the investment .level, in cash, inventories, accounts receivables and physical equipments, bad debt losses and collection costs. The various factors associated with credit policy are:

(i) Credit Standards

(ii) Credit Period

(iii) Cash Discount

(iv) Collection Programme.