Restrictions on Credit

Company Letterhead

{{company_name}}

{{company_address}}

Phone: {{phone}}

Email: {{email}}

Website: {{website}}

Date of Policy Implementation

This Credit Restrictions Policy is effective from {{effective_date}}.

Purpose of Policy

The purpose of this policy is to establish clear guidelines and procedures for the extension of credit to customers. This ensures prudent financial management, minimizes exposure to bad debt, and promotes consistent application of credit terms across all customer accounts. This policy applies to all departments and employees involved in the sales and credit approval process.

Credit Application and Assessment

All new customers wishing to receive goods or services on credit must complete a Credit Application Form ({{form_reference_number}}). The application must include full legal name, registration details (for companies), trade references, banking details, and consent for credit checks. Credit assessments will be based on factors including, but not limited to, credit history, financial statements, industry reputation, and payment terms requested. A credit score or rating may be assigned based on the assessment criteria.

Credit Limits

Each approved credit account will be assigned a specific credit limit, which represents the maximum outstanding balance allowed at any given time. This limit will be determined by the credit assessment and reviewed periodically, at least {{review_frequency}} (e.g., annually, bi-annually). Any request for an increase in the credit limit must follow a re-assessment process similar to the initial application. The current credit limit for {{customer_name}} is {{credit_limit}}.

Payment Terms and Conditions

Standard payment terms are {{payment_terms}} from the date of invoice. Any deviation from these standard terms must be approved in writing by the {{approving_authority}} prior to the commencement of the transaction. Overdue accounts will incur interest at a rate of {{interest_rate}}% per annum, calculated daily on the outstanding balance. The company reserves the right to suspend or withdraw credit facilities for accounts that consistently exceed payment terms.

Security and Guarantees

Depending on the credit assessment and the value of goods/services, the company may require security or guarantees. This could include personal guarantees from directors, retention of title clauses, or other forms of collateral. The specific requirements will be communicated to the customer in writing.

Breach of Credit Terms

In the event of a breach of these credit terms, including but not limited to exceeding the credit limit or late payments, the company reserves the right to: (a) immediately suspend further credit facilities; (b) demand immediate payment of all outstanding balances; (c) initiate debt collection procedures, including legal action, and recover all associated costs from the debtor; (d) report the delinquency to relevant credit bureaus.

Credit Review and Monitoring

All credit accounts will be subject to ongoing review and monitoring. This includes regular assessment of payment behavior, financial stability, and market conditions relevant to the customer. Accounts showing signs of deterioration in financial health or payment patterns will be flagged for immediate review and potential adjustment of credit terms or limits. The next review date for {{customer_name}} is {{next_review_date}}.

Policy Amendments

This policy may be amended or updated from time to time by {{company_name}} at its sole discretion. Any amendments will be communicated to affected parties through appropriate channels. It is the responsibility of all relevant employees to be familiar with the latest version of this policy.

Acknowledgement and Agreement

By applying for and accepting credit from {{company_name}}, the customer acknowledges and agrees to be bound by the terms and conditions outlined in this Credit Restrictions Policy.

Signature Block

Sincerely,

{{authorised_signatory_name}}

{{authorised_signatory_title}}

For {{company_name}}

Date: {{signature_date}}