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A Credit Policy sets the ground rules for how a Malaysian business handles customer credit, from approving new credit applications to managing payment terms. It guides finance teams and credit managers through key decisions like credit limits, collection procedures, and what to do when customers don't pay on time.

Under Bank Negara Malaysia's guidelines, every financial institution must maintain clear credit policies that align with risk management standards. These policies help protect businesses from bad debt while building strong customer relationships. They typically include credit assessment criteria, documentation requirements, and specific steps for handling different types of credit scenarios in the Malaysian market.

Use a Credit Policy when your business starts offering payment terms or credit facilities to customers in Malaysia. This becomes essential as your customer base grows and you need consistent rules for credit decisions, especially when dealing with different sectors and payment behaviors.

Malaysian companies turn to Credit Policies during key business changes - launching new products, expanding to new markets, or facing increased payment defaults. Bank Negara Malaysia requires financial institutions to update their credit policies regularly, particularly when market conditions shift or after significant credit losses. Having this framework ready helps prevent rushed decisions and ensures compliance with local financial regulations.

• Credit Note Policy: Focuses specifically on managing credit adjustments and refunds, helping Malaysian businesses maintain clear processes for issuing credit notes, handling tax implications, and documenting corrections to invoices under local GST requirements. The policy aligns with Bank Negara Malaysia's financial reporting standards and helps prevent accounting discrepancies.

• Financial Institutions: Banks and lenders must maintain Credit Policies that align with Bank Negara Malaysia's guidelines, using them to assess borrower risk and manage their loan portfolios.
• Credit Managers: Lead the development and enforcement of credit terms, approval processes, and collection procedures within their organizations.
• Finance Directors: Oversee and approve Credit Policy updates, ensuring alignment with company strategy and risk appetite.
• Legal Teams: Review and update policies to ensure compliance with Malaysian financial regulations and debt collection laws.
• Business Owners: Use Credit Policies to establish clear payment terms and protect their businesses from bad debt.

• Business Profile: Gather your company's financial data, risk tolerance levels, and typical customer payment patterns.
• Legal Requirements: Review Bank Negara Malaysia's latest credit management guidelines and local debt collection regulations.
• Credit Terms: Define your credit limits, payment deadlines, and early payment incentives based on industry standards.
• Risk Assessment: Document your credit evaluation criteria and scoring system for different customer categories.
• Collection Process: Map out your debt collection steps, including reminder schedules and escalation procedures.
• Documentation: Our platform helps generate a comprehensive Credit Policy template that incorporates all these elements while ensuring legal compliance.

• Purpose Statement: Clear objectives and scope of the credit policy, aligned with Bank Negara Malaysia's guidelines.
• Credit Assessment Criteria: Detailed evaluation parameters, including financial metrics and risk scoring methods.
• Documentation Requirements: List of required documents from credit applicants, following Malaysian KYC standards.
• Payment Terms: Specific conditions including credit limits, payment schedules, and late payment consequences.
• Collection Procedures: Step-by-step debt recovery process compliant with Malaysian debt collection laws.
• Data Protection Clauses: Privacy measures aligned with Personal Data Protection Act requirements.
• Review Mechanism: Regular policy review schedules and amendment procedures.

A Credit Policy differs significantly from a Credit Agreement in both scope and purpose. While Credit Policies set internal guidelines for managing customer credit across an organization, Credit Agreements are specific contracts between lenders and borrowers for individual transactions.

• Scope of Application: Credit Policies govern all credit-related decisions within a company, while Credit Agreements apply to single lending relationships or transactions.
• Legal Enforcement: Credit Policies serve as internal guidelines without direct legal binding on customers, whereas Credit Agreements are legally enforceable contracts between parties.
• Content Focus: Credit Policies outline evaluation criteria, risk management, and collection procedures, while Credit Agreements specify loan terms, interest rates, and repayment schedules.
• Regulatory Requirements: Under Bank Negara Malaysia's framework, financial institutions need both documents - Policies for overall credit risk management and Agreements for individual lending transactions.