Credit Policy Template for United States

A Credit Policy sets the rules and standards for how a business or financial institution handles lending decisions and manages credit risk in the Philippines. It outlines who can get credit, under what terms, and how the organization evaluates creditworthiness - all while following BSP regulations and the Truth in Lending Act.

The policy typically covers credit limits, interest rates, payment terms, and collection procedures. It helps protect lenders from excessive defaults while ensuring fair treatment of borrowers. Banks and businesses use these policies to make consistent lending decisions and maintain healthy cash flow, with regular updates to reflect changing market conditions and regulatory requirements.

Consider implementing a Credit Policy when starting or expanding lending operations, especially as your customer base grows beyond personal relationships. Banks, financial institutions, and businesses that extend credit need clear guidelines to evaluate borrower risk and maintain compliance with BSP regulations.

A Credit Policy becomes essential during key business changes: launching new credit products, entering different markets, or when default rates increase. It's particularly important when training new credit officers, standardizing approval processes across branches, or preparing for BSP audits. Having these guidelines ready helps avoid costly mistakes and ensures consistent decision-making throughout your organization.

• Client Credit Policy: Focuses on managing credit relationships with business customers, setting terms for B2B transactions, payment schedules, and credit limits based on customer profiles and business history.
• Credit Note Policy: Outlines procedures for issuing, tracking, and processing credit notes when adjusting customer invoices, handling returns, or correcting billing errors, ensuring compliance with BIR requirements.

• Financial Institutions: Banks, lending companies, and credit cooperatives use Credit Policies to guide their lending decisions and maintain BSP compliance.
• Credit Officers: Review and apply policy guidelines when evaluating loan applications and setting credit terms.
• Risk Management Teams: Develop and update policies based on market conditions and loss metrics.
• Business Owners: Small and medium enterprises rely on these policies when offering trade credit to customers.
• Compliance Officers: Ensure the policy aligns with BSP regulations and Truth in Lending Act requirements.

• Business Assessment: Document your current credit operations, default rates, and risk tolerance levels.
• Regulatory Review: Gather current BSP guidelines and Truth in Lending Act requirements affecting your credit operations.
• Market Research: Analyze industry standards for credit terms, interest rates, and collection practices in your sector.
• Internal Input: Consult with credit officers, risk managers, and collection teams about operational challenges.
• Policy Framework: Use our platform to generate a customized Credit Policy template that ensures compliance while matching your business needs.

• Policy Scope: Clear definition of covered transactions, products, and customer segments.
• Credit Evaluation Criteria: Specific requirements for creditworthiness assessment following BSP guidelines.
• Interest Rate Structure: Transparent disclosure of rates and computation methods per Truth in Lending Act.
• Collection Procedures: Legal steps for handling defaults and recovery actions.
• Documentation Requirements: List of required supporting documents and verification processes.
• Review and Amendment: Procedures for policy updates and compliance monitoring.

A Credit Policy is often confused with a Credit Agreement, but they serve distinct purposes in Philippine business operations. While a Credit Policy provides the overall framework and guidelines for lending decisions, a Credit Agreement is the specific contract between lender and borrower for a particular transaction.

• Scope and Application: Credit Policies are internal documents guiding all credit decisions, while Credit Agreements are external contracts for specific loans.
• Legal Enforceability: Credit Policies serve as operational guidelines, whereas Credit Agreements are legally binding contracts enforceable under Philippine contract law.
• Content Focus: Credit Policies outline evaluation criteria and risk management procedures, while Credit Agreements specify exact loan terms, payment schedules, and default consequences.
• Parties Involved: Credit Policies bind internal staff and management, while Credit Agreements create obligations between the lender and specific borrowers.