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A Credit Policy sets the rules and standards for how a Danish company handles lending decisions and manages credit risk. It outlines who can get credit, under what conditions, and how the organization will handle payments and collections. These policies must align with Danish financial regulations, including the Financial Business Act and consumer protection laws.

The policy typically covers credit assessment criteria, approval limits, payment terms, and debt collection procedures. For Danish businesses, it serves as both a practical guide for daily credit decisions and a compliance tool to meet regulatory requirements from Finanstilsynet (the Danish Financial Supervisory Authority). Having clear credit rules helps protect companies from bad debt while maintaining fair lending practices.

Your business needs a Credit Policy when you start offering payment terms, loans, or credit lines to customers. This becomes especially crucial as your Danish company grows and faces more complex financial relationships. The policy protects you from risky lending decisions and ensures compliance with Finanstilsynet's requirements.

Key moments to create or update your Credit Policy include: entering new markets, launching financial products, seeing an increase in late payments, or responding to regulatory changes. Many Danish companies implement these policies during their initial financing setup, but they're also valuable when restructuring credit operations or merging with other businesses. Regular reviews help maintain strong risk management and regulatory alignment.

• Standard Commercial Credit Policy: Sets basic terms for B2B transactions, focusing on payment schedules and credit limits for business customers
• Consumer Credit Policy: Tailored for retail lending under Danish consumer protection laws, with stricter documentation requirements
• Financial Institution Policy: Comprehensive framework used by banks and credit unions, following Finanstilsynet guidelines
• Trade Credit Policy: Specifically for supplier-customer relationships, outlining trade credit terms and collection procedures
• Internal Credit Control Policy: Details internal processes, approval hierarchies, and risk assessment methods for credit decisions

• Financial Directors: Oversee the development and implementation of Credit Policies, ensuring alignment with company strategy and Danish regulations
• Credit Managers: Handle day-to-day credit decisions and policy enforcement, updating procedures as needed
• Legal Counsel: Review and validate policies for compliance with Danish financial laws and Finanstilsynet requirements
• Sales Teams: Follow credit guidelines when negotiating payment terms with customers
• Account Managers: Apply credit limits and monitor customer payment behavior according to policy rules
• External Auditors: Evaluate policy effectiveness and compliance during financial audits

• Business Assessment: Document your company's credit needs, risk tolerance, and typical customer payment patterns
• Regulatory Review: Gather current Danish financial regulations and Finanstilsynet guidelines affecting credit operations
• Internal Structure: Map out approval hierarchies, credit limits, and decision-making processes
• Risk Parameters: Define credit scoring criteria, required documentation, and red flags
• Collection Procedures: Outline payment terms, late payment consequences, and debt collection steps
• Technology Check: Ensure your systems can handle credit monitoring and reporting requirements
• Stakeholder Input: Get feedback from finance, sales, and legal teams before finalizing

• Purpose Statement: Clear objectives and scope of the credit policy, aligned with Danish financial regulations
• Credit Assessment Criteria: Specific factors and documentation required for credit evaluation
• Authority Levels: Detailed approval hierarchies and decision-making limits
• Payment Terms: Standard credit periods, early payment discounts, and late payment consequences
• Risk Management: Credit limits, monitoring procedures, and risk mitigation strategies
• Collection Procedures: Step-by-step process for handling overdue accounts under Danish law
• Data Protection: GDPR-compliant procedures for handling customer financial information
• Review Process: Schedule and procedure for regular policy updates and amendments

A Credit Policy differs significantly from a Due Diligence Policy, though both help manage business risks. While Credit Policies focus specifically on lending decisions and payment terms, Due Diligence Policies cover broader risk assessment across various business activities.

• Scope of Application: Credit Policies primarily govern financial transactions and customer credit relationships, while Due Diligence Policies cover comprehensive business partner evaluations
• Risk Assessment Focus: Credit Policies concentrate on payment capability and financial stability, whereas Due Diligence examines legal, operational, and reputational risks
• Timing of Use: Credit Policies guide ongoing customer relationships and transactions, while Due Diligence typically precedes major business decisions or partnerships
• Regulatory Framework: Credit Policies align with Danish financial services laws, while Due Diligence Policies often relate to corporate governance and anti-money laundering requirements