How to build a B2B credit policy from scratch

Why more businesses are formalising their credit decisions

Businesses are acting on late-payment risk at the point of onboarding rather than after an invoice falls overdue. Prepayment requests have risen to 50 percent, up from 31 percent in 2020, and credit checks and fraud prevention are both more widely used than a year ago, according to Intrum's European Payment Report 2026. Each of these is a form of credit risk assessment applied before credit is extended, not after a loss occurs.

Regulatory protections are being used more actively. The EU's Late Payment Directive entitles businesses to interest and compensation when customers settle invoices late, and 60 percent now exercise this right, up from 42 percent in 2021, per Intrum's European Payment Report 2026. A credit control policy that references these entitlements gives a business a fixed position to point to when a customer disputes a claim, instead of negotiating the point from scratch each time.

These precautions remain the exception. No single measure is used by more than half of all businesses, which means most companies still extend credit without a consistent process behind the decision. That gap is where a documented credit policy earns its place.

Building a policy, not just a process

A single credit check or an occasional prepayment request is useful, but it is a control, not a policy. A policy sets out in advance who qualifies for credit, how much they are offered, and what happens when payment slips. Where that is missing, credit decisions are made under pressure by whoever is negotiating the sale, and consistency is the first casualty.

Regulation is moving in the same direction. A proposed revision to the Late Payment Directive would cap settlement terms for payments to SMEs at 30 days, while leaving terms for larger businesses open to negotiation. Business sentiment supports it: 71 percent think this would be fair to SMEs and 66 percent think it would have a positive impact on payments across Europe, according to Intrum's European Payment Report 2026. A business that already operates a tiered credit policy, with defined terms by customer type, will absorb a change of this kind far more easily than one still setting terms deal by deal.

The purpose of a credit policy is to make credit decisions repeatable, defensible and matched to the risk the business can actually carry.

A seven-step framework for building your credit policy

The following framework adapts into a working credit policy template for any company size or sector.

1. Define your credit approval criteria
   Decide what every applicant must meet before credit is considered at all. This is where you define creditworthiness for your business specifically, rather than borrowing a generic definition. Minimum requirements include a verified business registration, a defined minimum trading history, and at least one trade or bank reference. Without baseline criteria, credit gets extended according to who is asking rather than what the risk is.
2. Build a repeatable credit risk assessment process
   A credit check is one input. A thorough credit risk assessment draws on several: credit bureau reports, recent financial statements where available, trade references, and public records such as court judgments or insolvency filings. Map who owns each step and how long it should take, so the process does not become a bottleneck between sales and finance.
3. Group customers into risk tiers with clear credit limits
   Rather than negotiating a limit for every customer individually, group customers into a small number of risk tiers, each with a defined method for setting credit limits. A tier can be based on a percentage of known annual turnover, on payment history once a relationship is established, or on typical order size. What matters is that the method is applied consistently.
4. Set credit terms and payment terms by tier
   Standardise the credit terms attached to each tier: the number of days allowed for payment, whether an early payment discount applies, and what happens when a customer pays late. Publishing payment terms clearly, rather than negotiating them individually, reduces disputes later and gives sales a consistent starting point with prospects.
5. Establish a named credit approval process
   Decide who has authority to approve credit at each tier, and who can approve exceptions. Without a named decision maker, approval defaults to whoever pushes hardest, and that is sales, which erodes the value of the tiers you defined. Exceptions should stay possible, but visible and recorded rather than quietly overriding the policy.
6. Build in review triggers
   Credit limits should move with the customer. Define the events that trigger a review: a customer approaching their limit, a change in payment behaviour, a shift in their sector, or the passage of time since the last check. A credit control policy that reviews customers only once a year misses the changes that happen in between.
7. Document the policy and revisit it
   Write the policy down, including its purpose, scope, approval criteria, tiers, terms and review triggers, and make it accessible to everyone who needs it, not only the credit team. A policy held in one person's head is a dependency; a documented one is a safeguard. Review it at least once a year, and sooner when payment behaviour across the market shifts.

Turning a policy into ongoing practice

A credit policy is a living set of rules that a business tests against real customers, adjusts as circumstances change, and applies consistently enough that credit decisions stop depending on who is in the room. This year's data, with more businesses strengthening payment discipline and exercising their rights under the Late Payment Directive, points the same way: the businesses formalising this now will be better placed for what comes next. To turn scattered precautions into a consistent, data-led process, explore how Intrum's credit optimisation service supports credit approval, risk assessment and collection.