What factors to be considered while preparing a credit control policy?

- Organization's ability to extend credit

- Organization's operational strength with respect to deliveries, invoicing, collections

- Market Trends towards Credit Control

- Hotspot Identification strategies

- Incentives Vs Penalties Analysis

It must be both1 &2. Because measuring Organizational strength of giving credit is very important if the organization cannot survive by giving credit or number of days it can survive must be analysed. Also market trends like for what product the organization and whether other competitors and general market trend towards credit for the same product or products must be taken into account. No use of giving credit for items which are fast moving where the buyer will sure get his margin immediately so he will not mind paying the organisation by cash without availing credit.

1. Organizational strength of giving credit

2. Market trends

3. Risk calculation criteria

4. Client's due diligence 

5. Sales ownership