Credit Policy Generator for Australia

A Credit Policy sets the rules and standards for how an organization handles lending decisions and manages credit risk. It spells out who can get credit, under what conditions, and how the organization will handle payments and collections. For Australian businesses, this document needs to align with the National Consumer Credit Protection Act and responsible lending obligations.

Good credit policies protect both lenders and borrowers by creating clear guidelines for credit assessments, loan terms, and default procedures. They help organizations make consistent decisions, maintain healthy cash flow, and stay compliant with Australian credit laws while building strong customer relationships. Banks, retailers, and business-to-business suppliers all rely on these policies to guide their credit operations.

Put a Credit Policy in place before you start extending credit to customers or when expanding your lending activities. Australian businesses need this framework most when they're growing beyond cash-only sales, launching new credit products, or dealing with increased payment defaults.

It's essential to implement your policy when restructuring credit operations, entering new markets, or responding to changes in lending regulations. Many organizations create or update their Credit Policy after facing collection challenges or receiving compliance warnings from ASIC. Having clear rules ready before problems arise helps protect your business and maintains strong relationships with customers and regulators.

• Client Credit Policy: Focused on B2B relationships, this version details terms for business customers, including credit limits, payment schedules, and account review procedures.
• Credit Note Policy: Specifically addresses how your organization handles refunds, returns, and adjustments to customer invoices, including documentation requirements and approval processes.
• Industry-Specific Credit Policies: Tailored versions for retail, manufacturing, or financial services sectors, with unique risk assessment criteria and industry-standard payment terms.
• Consumer Credit Policies: Structured to comply with Australian consumer protection laws, these focus on individual borrowers and include responsible lending requirements.

• Finance Directors and CFOs: Set overall credit strategy and risk tolerance levels, approve major policy changes, and oversee implementation across the organization.
• Credit Managers: Handle day-to-day policy enforcement, assess credit applications, and monitor compliance with established guidelines.
• Sales Teams: Work within policy limits when offering payment terms to customers, understanding credit boundaries for different client segments.
• Legal Counsel: Review and update Credit Policy content to ensure alignment with Australian credit laws and regulations.
• Business Customers: Must comply with policy terms when seeking credit arrangements and maintaining payment schedules.

• Risk Assessment: Review your current credit exposure, default rates, and industry benchmarks to set appropriate credit limits and terms.
• Legal Requirements: Check current ASIC guidelines and Australian consumer credit laws that affect your industry and customer base.
• Business Goals: Define clear objectives for customer credit limits, payment terms, and collection procedures.
• Internal Processes: Document your approval hierarchy, credit assessment criteria, and dispute resolution procedures.
• System Capabilities: List available tools for credit checks, payment processing, and monitoring systems that will support policy implementation.
• Draft Generation: Use our platform to create a legally-sound Credit Policy that incorporates all essential elements while meeting Australian compliance requirements.

• Purpose Statement: Clear objectives and scope of credit activities, aligned with Australian credit laws and responsible lending obligations.
• Credit Assessment Criteria: Specific factors for evaluating creditworthiness, including required documentation and verification processes.
• Credit Limits: Defined authority levels, maximum exposure limits, and approval hierarchies.
• Payment Terms: Clear payment schedules, late payment consequences, and interest calculations compliant with Australian regulations.
• Collection Procedures: Step-by-step process for managing overdue accounts and debt recovery.
• Privacy Compliance: Rules for handling customer information under Australian Privacy Principles.
• Review Process: Procedures for regular policy updates and maintaining compliance with changing regulations.

A Credit Policy differs significantly from a Credit Agreement. While they're related, they serve distinct purposes in Australian business operations.

• Scope and Purpose: A Credit Policy sets company-wide rules and standards for all credit activities, while a Credit Agreement is a specific contract between lender and borrower for a single credit arrangement.
• Legal Nature: Credit Policies are internal governance documents that guide decision-making, while Credit Agreements are legally binding contracts that create enforceable obligations between parties.
• Flexibility: Policies can be updated by the organization as needed to reflect changing business conditions, but Agreements require mutual consent from all parties to modify terms.
• Application: The Policy provides the framework for creating individual Credit Agreements, ensuring consistent treatment across multiple transactions and maintaining compliance with Australian lending regulations.