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Do's and Don'ts: Credit Policies


DO develop a credit and collection policy if you are going to offer credit to your customers. Planning ahead and knowing how things are going to work will save you a lot of time and energy later.

DO be sure that your credit policy meets your cash flow needs. Be sure that you have enough money coming in from your invoices to pay your company's bills to its vendors.

DO try to talk to your customer in person or on the phone about his or her past due bill. It is much easier to ignore a bill or reminder notice than a person.

DO ask your customer to give you a specific date when the payment will be made when you talk to him or her about a past due bill.

DO listen to your customer's reason for not paying the bill. If there is a problem that your company can fix, you should do so.

DO contact your attorney regarding your credit and collection policy. Your attorney will be able to advise you regarding state and federal laws applicable to collection matters.


DON'T let customer obligations "slide" without taking any collection action. The longer that you let an account go, the harder it will be to collect.

DON'T get angry if your customer makes excuses for not paying. Instead, calmly ask the customer for a promise of when he or she will be making payment, and in what amount.

DON'T have the person who sold the product be the one to collect the debt. The sales person will usually not have the ability to be impartial.

DON'T threaten to turn the account over for collection unless that is what you are actually going to do.

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