��������Ƶ

A Credit Policy sets out how an organization handles lending decisions and manages credit risk. It guides staff on evaluating customer creditworthiness, setting credit limits, and handling payment terms. For Irish businesses, these policies must align with the Central Bank of Ireland's requirements and consumer protection frameworks.

Good credit policies protect both lenders and borrowers by creating clear rules for credit assessments, documentation needs, and collection procedures. They help financial institutions and businesses maintain healthy cash flow while following Irish banking regulations and European Union directives on responsible lending practices.

You need a Credit Policy when starting to offer payment terms or financing to customers in Ireland. This becomes essential as your business grows beyond cash-only transactions or when dealing with significant credit exposure. Most companies implement their Credit Policy before their first major B2B credit sale or when expanding their financing options.

Many Irish businesses create or update their Credit Policy when entering new markets, changing credit terms, or responding to Central Bank guidance. It's particularly important when expanding operations, experiencing payment delays, or noticing inconsistent credit decisions across different departments. Having clear credit rules helps prevent financial losses and maintains regulatory compliance.

• Credit Note Policy: Specifically governs how a business handles credit notes and refunds, including approval processes and documentation requirements under Irish VAT regulations.
• Enterprise Credit Policy: Comprehensive guidelines for large organizations, covering multiple business units and complex credit arrangements with detailed risk assessment frameworks.
• Retail Credit Policy: Tailored for consumer-facing businesses, focusing on personal credit assessments and compliance with Irish consumer protection laws.
• Trade Credit Policy: Designed for B2B transactions, outlining terms for supplier credit and managing commercial payment relationships.

• Finance Directors: Create and oversee Credit Policy implementation, ensuring alignment with company risk appetite and Irish financial regulations.
• Credit Controllers: Apply the policy daily when assessing credit applications and managing customer accounts.
• Sales Teams: Must understand and follow credit limits and terms when negotiating with customers.
• Business Owners: Review and approve policy changes, especially in SMEs where they directly manage credit risk.
• Compliance Officers: Monitor adherence to Central Bank of Ireland guidelines and ensure the policy meets regulatory requirements.

• Business Profile: Gather details about your company's size, industry, and typical customer payment terms.
• Risk Assessment: Document your risk tolerance levels and current bad debt ratios.
• Credit Limits: Define authority levels for credit approval and maximum exposure limits.
• Payment Terms: List standard payment timeframes and any early payment discounts.
• Collection Procedures: Outline steps for managing overdue accounts and debt recovery.
• Regulatory Compliance: Note relevant Central Bank of Ireland guidelines and consumer protection requirements.
• Internal Review: Have key stakeholders validate the policy meets operational needs.

• Purpose Statement: Clear objectives and scope of the credit policy, aligned with Irish business regulations.
• Credit Assessment Criteria: Specific factors and procedures for evaluating creditworthiness.
• Risk Management Framework: Methods for identifying, measuring, and controlling credit risk exposure.
• Documentation Requirements: Required forms, financial statements, and verification procedures.
• Data Protection Measures: GDPR compliance statements for handling customer financial information.
• Collection Procedures: Legal steps for debt recovery under Irish commercial law.
• Review and Update Process: Schedule and procedure for policy updates and compliance checks.

A Credit Policy differs significantly from a Credit Agreement. While both deal with financial arrangements, they serve distinct purposes in Irish business operations.

• Scope and Purpose: A Credit Policy provides company-wide guidelines for managing credit risk and decision-making, while a Credit Agreement is a specific contract between lender and borrower for a particular transaction.
• Legal Status: Credit Policies are internal governance documents that guide staff behavior, whereas Credit Agreements are legally binding contracts enforceable under Irish contract law.
• Content Focus: Credit Policies outline assessment criteria, risk limits, and collection procedures, while Credit Agreements specify loan terms, interest rates, and repayment schedules.
• Application: Credit Policies apply broadly to all credit decisions within an organization, but Credit Agreements govern individual lending relationships.