Before any credit is extended to a customer, it’s important to have credit terms in place. It guides the credit department in creating a solid plan for every case they come across, instead of just make decisions on a whim. However, this credit term plan shouldn’t be created just be one person. There should be multiple sources of input, since the credit terms can affect many more in the organization than just the credit department.

Below are some of the roles and departments that should be included in developing your credit terms, and why their role in the discussions are important.


The credit manager is a pretty obvious requirement for building your credit terms. They’re the ones that will actually be creating and implementing the credit terms once they have been fleshed out by the company. The credit manager will be responsible for ensuring that all other department’s goals, especially management, are present in the credit terms. Once the terms have been created, the credit manager will be in charge of ensuring the terms are enforced and used for every potential customer, and customer, that interacts with the credit management team.


The CFO’s role is to ensure that there is minimal financial risk and that the company maintains a healthy financial portfolio. For this reason, the CFO should be involved in discussions about the credit terms created for the company. When it comes to ensuring that the cash flow for the organization is at a healthy rate, the CFO will want to know how the credit terms can potentially impact this. The CFO should make clear their business goals and how the credit terms can have an impact on this. Metrics on how the credit terms are impacting the business should be presented to the CFO every few months.


The collections manager is the person who will actually be enforcing the credit terms, so they are vital in helping to develop the credit terms for customers. The collections manager and representatives will be the ones working with the customers directly, so their input on what is working and what will work for customers is an important aspect to be taking into consideration when developing credit terms. Your credit terms are only going to be as successful as what is feasible to enforce. Once the credit terms are enacted, the collections team will be able to report on the success and collections rates post-implementation.


The sales team knows who your customers are and what your target audience looks like. Your credit terms will need to fall closely in line with these objectives. If your credit terms are either too strict, or too loose, you could fail to gain customers or customers that will still pay you on time. The sales team will also be tasked with presenting the credit terms when they are closing deals. The sales team is also a viable resource to the collections team when it comes to working to get paid on time, as the sales team has relationships with their customers that can be used to the collections team’s advantage.