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Last updated 12/14/24
1. Purpose
The purpose of this credit policy is to establish clear guidelines for extending credit to our customers and to minimize financial risk while maintaining strong business relationships. This policy applies to all customers who purchase daycare and early education products and furniture from our company.
2. Credit Eligibility
2.1 Customer Assessment:
To determine credit eligibility, customers must undergo a thorough credit evaluation. This evaluation includes, but is not limited to:
- Submission of a completed credit application.
- Review of trade references and payment history.
- Assessment of financial statements, where applicable.
- Evaluation of credit scores through third-party credit agencies.
2.2 Minimum Requirements:
- A positive credit history with no significant delinquencies in the past 24 months.
- The ability to provide at least three valid trade references.
- A minimum operating history of 12 months (exceptions may be considered on a case-by-case basis).
3. Credit Limits
3.1 Initial Credit Limits:
- Initial credit limits will be set based on the customer’s creditworthiness and purchasing volume. Limits typically range from $5,000 to $50,000 for qualified customers.
3.2 Credit Limit Adjustments:
- Credit limits may be reviewed and adjusted periodically based on purchasing history, payment performance, and updated credit evaluations.
- Customers may request an increase in their credit limit by submitting updated financial information and trade references.
4. Payment Terms
4.1 Standard Terms:
- Payment terms are Net 30 days from the date of invoice unless otherwise specified in the sales agreement.
4.2 Early Payment Discounts:
- A 2% discount may be applied for payments made within 10 days of the invoice date (optional, based on company discretion).
4.3 Late Payments:
- Payments not received by the due date will incur a late fee of 1.5% per month on the outstanding balance.
- Accounts with balances overdue by more than 60 days will be placed on hold until payment is received.
5. Credit Review and Monitoring
5.1 Ongoing Monitoring:
- Customer accounts will be reviewed quarterly to ensure compliance with payment terms and credit limits.
- Delinquent accounts will be flagged and reviewed by the credit department.
5.2 Annual Credit Review:
- All active accounts will undergo an annual credit review to reassess creditworthiness and adjust limits as necessary.
6. Collections
6.1 Internal Collections Process:
- Reminder notices will be sent 5 days after the due date.
- Follow-up calls will be made 15 days after the due date.
- A formal demand letter will be issued for payments overdue by 30 days.
6.2 Third-Party Collections:
- Accounts overdue by 90 days or more may be referred to a third-party collections agency or legal counsel for further action.
7. Dispute Resolution
7.1 Invoice Disputes:
- Customers must notify the company of any invoice disputes within 10 days of receipt.
- Disputes will be reviewed and resolved within 15 business days.
7.2 Resolution Process:
- Disputed amounts will not incur late fees during the resolution period. Non-disputed amounts must still be paid by the due date.
8. Exceptions
- Exceptions to this credit policy may be made at the discretion of the credit manager or senior management, provided they are documented and approved in writing.
9. Policy Updates
This credit policy will be reviewed annually and updated as necessary to reflect changes in market conditions and company operations.
10. Approval and Implementation
This policy is effective as of [Date] and has been approved by [Approving Authority]. All employees handling customer accounts must adhere to these guidelines.
11. The company reserves the right to apply a surcharge of up to 2% on all credit card transactions to offset processing fees.
12. Once a product has been ordered and confirmed, any attempt to return the item will be subject to a 50% restocking fee.