Credit Control Limits 


The University's Financial Regulations (7.1.1) state that "the budget holder for each area of the University which receives income from the sale of goods and services is responsible for establishing procedures to ensure all sales are authorised and are made only to acceptable credit risks".

This document defines what is considered to be an acceptable credit risk which will be allowable while endeavouring not to detract from the ability of the University to maximise its sales potential.

Levels of risk

A) Category A Clients

These are defined as government bodies and companies appearing on the FTSE 100 share index. The maximum credit which can be extended to such clients by the University of Westminster will be £250,000. Any clients other than these who wish to have credit extended to them must be referred to the Director of Finance for approval. This limit must not be exceeded under any circumstances unless agreed in writing by the Director of Finance.

B) Category B Clients
 
These are defined as companies or partnerships for which bookings are confirmed on company letterhead. The maximum credit which can be extended to such clients is £50,000. Bookings can be made for over this amount but a deposit must be received and cleared through the University's bank account to ensure the outstanding credit exposure (or debt) does not exceed £50,000 at any point.

C) Category C Clients

These are defined as individuals who confirm bookings by letter, email or fax. The maximum credit limit which can be extended to such clients will be £10,000. Bookings can be made for over this amount but a deposit must be received and cleared through the University's  bank account to ensure the outstanding credit exposure (or debt) does not exceed £10,000 at any point.

D) Overseas Clients

The maximum credit limit which can be extended to each client will be £10,000 (or the equivalent in the currency of the country from where the booking originates). Bookings can be made for over this amount but a deposit must be received and cleared through the University's bank account to ensure the outstanding credit exposure (or debt) does not exceed £10,000 at any point.

E) General

Under no circumstances can the agreed limits set out above be exceeded unless written approval has been given by the Director of Finance or his designate. Companies who have been referred to solicitors must not be extended any future credit unless approved by the Director of Finance or his designate. Many firms have standard credit application forms to be completed with bank and trade references and this policy should also be considered by the University of Westminster.
 
Clearly the University cannot expose itself to a sizeable bad debt by extending credit without due care to the risk and, hence, we must develop a set of standard rules with a clear exception approval policy in place.