Krueger, (2005) credit policy is designed to minimize costs associated with credit while
maximizing the benefits from it. Credit policy refers to guidelines that spell out how to decide
which customers are sold on open account, the exact payment terms, the limits set on
outstanding balances and how to deal with delinquent accounts According to (Pandey, 2007;
Atkinson, Kaplan & Young, 2007 and Brigham, 1985) credit policy is defined in the manner
as the combination of such terms as credit period, credit standards, collection period, cash
discounts and cash terms. Therefore, despite the fact that organizations have different credit
policies, the content of these policies must touch on credit period, credit standards, collection
period and credit terms.