Credit control policy and collection letters

What the credit control policy and collection letters gives you

Late payment hurts cash flow more than almost anything else. This pack gives you a written credit control policy for a small business, covering credit limits, terms, checks on new customers and follow-up steps, and four ready-to-complete collection letters: a friendly reminder, a second notice, a final demand and a payment plan agreement.

Who it is for

Business owners and credit controllers who sell on credit and want to collect faster without losing customers.

How to use it

1. Fill in your credit terms and limits in the policy.
2. Check every new credit customer before you supply.
3. Follow the collection steps on the due date, not later.
4. Use the letters in order and keep copies.
5. Keep a signed or dated copy with your records, so you can show what was agreed or done.

What is inside

• Credit policy with limits and terms
• New customer check
• Collection timetable
• Four collection letters
• Payment plan agreement

The document is a ready-to-print PDF with these parts: 1. Credit policy, 2. Collection timetable, Letter 1: Friendly reminder, Letter 2: Second notice, Letter 3: Final demand, Payment plan agreement. It is laid out for A4, with the headings, tables and tick boxes already in place, so you can print it and fill it in by hand, or type into it with a PDF editor.

Tips for getting it right

• Agree payment terms in writing before the first sale.
• Invoice promptly and accurately.
• Phone before you write; keep a record of every call.
• Stop supplying when a customer is far overdue.

Why it helps

Accounting records let you answer three questions at any time: what came in, what went out and who owes whom. Kept consistently they also make tax returns, loan applications and the sale of a business much easier, because the evidence is already organised. Entering transactions the day they happen is far cheaper than reconstructing them at year end.

Questions people ask

Can I edit it? It is a PDF, so it is meant to be printed and completed, or filled with a PDF editor. If you want to change the wording, copy the text into Word or Google Docs and adapt it to your business.

Is it legal advice? No. It is a practical starting point written for Kenya. Rules change, so check the current position and ask a professional where the stakes are high.

Will it work on my phone? Yes for reading. For filling in and printing, a computer or a PDF app works best.

Keeping it safe and up to date

Good accounting records are a legal duty as well as a management tool: keep the supporting receipts and invoices with the workbook, and keep each year's copy for at least five years. Work on a copy, never on your only file, and back it up.

Read how to keep business records for KRA for the wider picture. Free calculators that go with it: Vat calculator. See more accounting templates or ask us for a custom one.

This document is general information, not tax, legal or accounting advice, and it is not affiliated with the Kenya Revenue Authority. If something does not work as described, contact us and we will put it right.

Related guides, calculators and templates

• Free calculator: VAT Calculator
• Guide: How to set up an M-Pesa till or Paybill for your business and account for it
• Guide: How KRA uses data matching and what it means for you
• Guide: How to protect your business from fraud and theft
• Another template: 13-week cash flow forecast
• Another template: Accounts receivable ledger (up to 1,000 invoices)
• Another template: Bank balance tracker

Need something different? Request a custom template, browse all guides or see every Excel template.