A lenient credit policy tends to give credit to customers on very liberal terms and standards
such that credit is granted for longer periods even to those customers whose credit worthiness
is not well known. A stringent credit policy on the other hand is restrictive and allows credit
only to those customers whose credit worthiness have been ascertained and are financially
strong. There are no two organizations with a similar credit policy. Whether lenient or
stringent credit policy is adopted by an organization, it must ensure that it attracts and retains
good customers, without having a negative impact on the cash flow (Kalunda, Nduku &
Kabiru, 2012).