Credit policy

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Credit standards. The financial strength and creditworthiness that qualifies a customer for a firm's regular credit terms.

Credit policy is the firm's policy on granting and collecting credit. There are four elements of credit policy, or credit policy variables: credit period, credit standards, collection policy, and discounts.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Credit policy. The firm's policy on granting and collecting credit. There are four elements of credit policy, or credit policy variables: credit period, credit standards, collection policy, and discounts.

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