Credit Requirements

Credit Requirements

The credit policy is closely related to the credit terms given. These credit requirements are useful for increasing credit sales and stimulating customers to pay their bills immediately. In addition, the period of credit provided also gives room for customers to pay for the credit they receive.

For example, a company provides 2/10 credit terms, net 30 means that customers will be given a 2 percent discount on payment from the company within ten days. Meanwhile, the credit period is thirty days, which means the credit is paid within thirty days.

If the company provides 2/10 credit terms, net 60 means that the customer will be given a 2 percent discount payment and sales if the company pays within ten days. Meanwhile, the credit period is sixty days which means the credit is paid in sixty days.

Then the company can extend the credit period to increase sales. However, extending the term of the credit carries a risk, that is, the amount of funds embedded in the receivables is greater and the more potential to make the credit default.

Then, to install the speed of credit payments, it can also be done with cash deductions. Giving this discount can be done by increasing the discount such as 2/10, net 30 to 3/10, net 30 or in accordance with company policy.

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