Implementing An Initial Trade Credit Policy For An Emerging Cannabis Related Business

Prepared by the Risk Management & Insurance Committee (RMIC)
Prepared by NCIA

The cannabis market is evolving and more and more companies in all segments of the market that have previously operated only in a cash/COD environment are now starting to extend credit terms to their customers either by choice or due to market competition. This is not an unusual situation. Accounts receivable is often the largest asset on a company’s balance sheet.

Implementing a formal process for managing credit & collections and accounts receivable is commonly referred to as a Trade Credit Policy or just a Credit Policy. In this White Paper by NCIA’s Finance and Insurance Committee, we will detail the steps required to implement a Trade Credit Policy. This process may assist with placing your company on a sound financial basis by giving better control of a major asset and making it easier for you to secure external financing.

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