Credit management is the process of granting credit, setting the terms on which it is granted, recovering this credit when it is due, and ensuring compliance with company credit policy, among other credit related functions. The goal within a bank or company, in controlling credit, is to improve revenues and profit by facilitating sales and reducing financial risks. A structured credit policy ensures that the credit team uses a standardized method for managing a customer’s credit risk. This leads to consistent credit decisions and eliminating compliance issues because there is an audit trail.
