Introduction
Credit policy is a total system through which the decision regarding extend the credit has been taken, Though American credit policies are largely different from Europe but still the American credit policy has its influence on credit policies of Europe as well Asia. As the credit policy of any business has strong impact over the cash flows of that business, similarly credit policy of a country can strongly impact over the monetary policy.
Goal of the Credit Policy
Primary goal of any credit policy is to restrict credit limits of those customers who are unable to pay their credit and also avoid extending the credit limits of such customers. Credit policy is based on some principals and understandings however the goal remains same weather it is American credit policy or European police.
Detail
Credit Policy for Large Enterprises
The basis of credit policy is same but there is a difference involves when it comes to small and large businesses. For large businesses American credit policy is bit formal as there is lots of documentation as well as guidelines are involved.
Features
Credit Policy for Small Businesses
Unlike large corporations American Credit Policy for small businesses is quite informal and mostly based on their own understandings of the customers.
Credit Policies of America and Europe
Credit policy for America and Europe are different but it is true to say that in last century American credit policies have extended influence all over the world specially post war era. When European Union formed, Europe starts to develop their credit policies, which are based on the geo political situation of Europe.
Comments
What is a good Credit Policy?
The American credit policy which is extra strict and has lots of formalities for the customers often tends to decrease in sale and eventually decrease the profit of the business while on other hand soft credit policies results in non payment from the customers which also leads towards loss and lake of cash flow. The idea credit policy is the one which have the ability to sustain the cash flow of the company without losing the customer.Most of the experts believe that the American credit policies should be based on the specific situations of different countries and businesses. Uniform trade policies neither deliver nor can be made as every country and every firm has its own problems. An ideal credit policy is the one which increase the profitability .If someone thinks that American Credit policies can work in Europe than he needs to think again.Most of the times we talk about American credit policies. Few experts also criticize the change in European credit policies but the fact is that every country needs to prepare policies as per their needs and specific situations. Credit policy is the total system of a business which can increase and decrease the cash flows. Those credit policies which are carefully prepared and according to the situation always pay in a positive way while extra strict and extra liberal policies eventually have negative impact n the cash flows.
