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Creating a credit control policy

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Last editedAug 20203 min read

Dealing with late payments? Is your cash flow suffering as a result? Developing formal credit control procedures could be a step in the right direction. But how do you create a credit control policy from scratch? Find out everything you need to know about producing a defined credit control and debt collection policy for your business and take a look at our credit control policy template for the UK.

What is a credit control policy?

Essentially, a credit control policy – also referred to as a credit control and debt collection policy – is a set of rules that staff needs to follow when trading on credit terms. It ensures that you maintain a cohesive and coordinated approach to credit control across your entire organisation, meaning that every customer will receive the most appropriate credit terms. It’s also important to note that credit policies vary dramatically from business to business as they’re based on past experiences and best practice.

How to create an effective credit control policy

Building a simple, yet effective credit control policy may seem like a difficult mountain to climb, but it doesn’t have to be. Follow these five steps to create a credit policy document for your business:

  1. Define roles, responsibilities, and internal processes – First off, you need to decide upon your internal credit control processes and work out how they’re going to be divided between different departments/members of staff. To do this, outline each stage of the credit control process, assign roles so that everyone knows what their responsibilities are, and document this process in a system diagram.

  2. Determine your credit checking procedure – Next, you should determine how you’re going to check your customer’s credit rating. Outline the reasons for the checks, provide an explanation of which credit check services you use, and ensure that credit checking is built into your business’s processes so that if their credit rating drops, you aren’t caught off guard.

  3. Set terms and conditions – Now, you need to provide further details regarding how and when customers will need to settle their bill. Some of the key areas that your terms and conditions (T&Cs) need to cover include payment terms, credit facilities, late-payment penalties, and debt collection policies.

  4. Agree credit limits for each of your clients – One of the most important stages of creating a credit control and debt collection policy is setting credit limits for your clients. This way, you can alleviate your risk as much as possible. Ask your customers to fill out a credit agreement and ensure that you’re setting clear credit limits that reflect their individual credit status.

  5. Dictate payment methods – Finally, you need to ensure that customers make payment through the right channel. Explain your preferred options, whether that’s Direct Debit or credit card payment, and provide your customers with all the information they need to make payment (account numbers, sort codes, etc.).

Credit control policy template

Now that you know a little more about how to produce a credit policy, let’s look at a credit control policy template to see how this works in practice:

Credit control policy


This credit control policy sets out the requirements for payment terms with [Company Name]’s customers.


This policy applies to all sales that are made within the United Kingdom and internationally.


[Company Name] agrees to extend credit to customers that meet the threshold for granting credit. The maximum credit that can be granted is [maximum amount of credit] with no security interest. The maximum credit limit may be increased on a per customer basis, subject to the approval of the [job title]. All payment terms are net [number of payment days]. Credit applications will be reviewed to determine credit worthiness. In the event of a low credit score, credit level may be reduced. The repayment history of all customers will be reviewed on a periodic basis to determine whether existing credit levels need to be revised.


The [job title] is authorised to extend credit to customers and provide them with information regarding their credit status. Other members of the [job title]’s team may also communicate with customers regarding their credit status and payment responsibilities.


Invoices will follow [Company Name]’s standard template and provide all necessary information. Customers will be invoiced within [number of days before invoicing] of order completion.


The collection schedule will be as follows:

[Outline of your company’s communication schedule regarding payment]

If the invoice becomes [X number of days overdue], a debt collection agency will be tasked with recovering the amount owed.

Payment method

The preferred payment method is [your preferred payment method]. [Other acceptable payment methods, i.e. credit card, Direct Debit, cash] are also accepted.

Terms and conditions

This policy is applied in conjunction with [Company Name]’s general terms and conditions.

Remember, this is an example of a relatively short credit control policy template for the UK and it may not cover everything that a credit control and debt collection policy specific to your business needs. However, you can find a broad range of credit control policy examples online, so do some research to find a credit control policy template that suits your business down to the ground.

We can help

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Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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