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A Credit Policy sets the rules and standards for how an organization extends credit to customers or business partners. It guides key decisions about who can receive credit, how much to offer, and what happens when payments are late. In Singapore, these policies must align with the Banking Act and MAS guidelines on risk management.

Think of it as your organization's playbook for managing credit risk. It covers everything from customer assessment criteria and credit limits to collection procedures and debt recovery steps. A well-crafted Credit Policy helps protect your business from bad debts while maintaining good relationships with reliable customers. Most Singaporean banks and financial institutions review their policies annually to stay current with market conditions.

A Credit Policy becomes essential when your business starts offering payment terms or credit facilities to customers. For Singapore-based companies, implementing this policy is crucial before extending any significant credit lines, especially when dealing with new clients or expanding credit offerings.

You need a Credit Policy when scaling operations beyond cash-only transactions, managing multiple customer accounts, or facing increased credit risk exposure. It's particularly vital for businesses regulated by MAS, companies with high-value B2B transactions, and organizations looking to standardize their credit assessment processes. Having this framework ready helps prevent payment disputes and supports compliance with local banking regulations.

• Credit Note Policy: Focuses specifically on managing credit adjustments and refunds, including approval workflows and documentation requirements. Most Singapore businesses adapt their Credit Policy into several key variations: standard commercial policies for B2B transactions, retail-focused policies for consumer credit, specialized versions for financial institutions meeting MAS requirements, and industry-specific policies tailored to sector risks and payment patterns.

• Finance Directors & CFOs: Set overall Credit Policy strategy, approve credit limits, and ensure alignment with company risk tolerance
• Credit Controllers: Handle day-to-day implementation, customer assessments, and monitoring of credit compliance
• Legal Counsel: Review policy terms, ensure compliance with MAS regulations, and advise on enforcement procedures
• Sales Teams: Follow credit guidelines when negotiating payment terms with customers
• Business Customers: Must comply with credit terms, provide required documentation, and maintain payment schedules
• Compliance Officers: Monitor adherence to credit procedures and report violations to management

• Business Assessment: Map out your credit needs, typical customer profiles, and industry-specific risks
• Financial Limits: Determine maximum credit amounts, payment terms, and late payment penalties
• Legal Requirements: Review MAS guidelines and Singapore banking regulations affecting credit operations
• Risk Controls: Define credit assessment criteria, approval workflows, and monitoring procedures
• Documentation: List required customer documents, credit application forms, and verification processes
• Implementation Plan: Outline staff training needs, system requirements, and rollout timeline
• Policy Generation: Use our platform to create a customized Credit Policy that incorporates all these elements automatically

• Policy Scope: Clear definition of covered transactions, products, and customer types
• Credit Assessment Framework: Detailed criteria for evaluating creditworthiness and risk scoring methods
• Credit Limits: Guidelines for setting and reviewing credit limits, including authority levels
• Payment Terms: Specific conditions including payment schedules, grace periods, and late payment consequences
• Documentation Requirements: List of mandatory documents needed from customers seeking credit
• Collection Procedures: Step-by-step process for managing overdue accounts and debt recovery
• Data Protection: Compliance with PDPA requirements for handling customer information
• Review Mechanism: Schedule and process for policy updates and amendments

A Credit Policy differs significantly from a Credit Agreement. While both deal with credit relationships, they serve distinct purposes in Singapore's business environment. A Credit Policy provides the internal framework and rules for managing credit operations, while a Credit Agreement is a specific contract between lender and borrower.

• Scope and Application: Credit Policies are company-wide guidelines affecting all credit decisions, while Credit Agreements are transaction-specific documents for individual lending arrangements
• Legal Enforceability: Credit Policies are internal governance documents, while Credit Agreements are legally binding contracts enforceable in Singapore courts
• Content Focus: Credit Policies outline assessment criteria and procedures, while Credit Agreements specify exact terms, interest rates, and repayment schedules
• Parties Involved: Credit Policies guide staff behavior and decision-making, while Credit Agreements create direct obligations between specific parties