You should take into your consideration when establishing a credit policy the factors that will be the standard practices in your line of business. It is most common in many businesses that customers with 30-day payment terms. In spite of the fact that you are not obligated to accept terms imposed by your customers, but it is extremely important to recognize these standard or common practices. Most businesses operate on a standard pay cycle, issuing payments once a week, for example, based on an accounts payable system that age invoices and calls up for payment those that are due. In many cases, when the invoices are entered into the system, the due date will be assumed to be or will default to 30 days. The 30-day payment period is an example and it does vary, according to business’s nature, type of industry, general economic industries conditions, and individual companies’ financial policies and practices. You will need to provide your small business cash flow permits, by making it easier for your customers to pay you, it may be acceptable and beneficial, to accept the standard terms of your customers as your company is newly established. However you may be in a business that normally involves payment on cash terms; which means, you receive payment for your sales essentially by cash, check, credit or debit card, or electronic transfers of funds. Your credit policy would involve the exceptions when you would extend credit to a particular customer based on a certain set of circumstances. Though even in the case of an exception, the same principles would apply in deciding whether to grant credit to that customer. Considerations regarding the potential customer Some of the questions that may form part of a credit evaluation of a particular company include the following:

• How long has the company been in operation?
• Are you familiar with the company?
• Is the company generally recognized in your market, industry, or community?
• Does the company have a physical address?
• Do you know the manager?
• Has the company undergone a change of management or a restructuring?
• Who are the owners?
• Has the company undergone a change of ownership?
• PAYDEX score
• Is the company in bankruptcy or has it declared bankruptcy in the past?

Dunn – Bradstreet PAYDEX: The most important things to know as a business is your Paydex score. A company’s Paydex score is the business equivalent to your personal FICO score, or personal credit score. Knowing what this number is and having the secrets to increasing your Paydex score can mean acquiring the financing necessary to start or grow your business and make the difference in achieving your business goals. On the flip side, not managing your Paydex score will cost your business. The exact definition from Dunn &Bradstreet or D&B is: The D&B PAYDEX® Score is D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors. The D&B PAYDEX Score ranges from 1 to 100, with higher scores indicating better payment performance.

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