Annual Credit Review Template
Once a year, step back from individual accounts and review your whole credit function — this template structures that review so you fix what is leaking and tighten what is loose.
What's included
- A structured annual review of your credit function
- The ledger and policy metrics to examine
- How to surface what caused any bad debts
- Actions to carry into the next year
7 min read
Why review the whole function
Account-by-account reviews keep individual limits current, but once a year it pays to look at the system: is the policy working, are limits being enforced, what did bad debts have in common, and where is cash leaking through slow payment? This bigger review is where you fix the process, not just the accounts.
Schedule it annually and after any large bad debt. The template below gives you the agenda.
The annual credit review template
ANNUAL CREDIT REVIEW — [Year] Ledger health Total debtors: $______ Average days-to-pay: ______ % overdue (30/60/90+): ______ / ______ / ______ Largest single exposure: $______ Debtor concentration (top 5 as % of total): ______ Bad debts this year Number: ______ Total written off: $______ Common factors: __________________________ Were controls bypassed? __________________ Policy and process Credit policy current? [ ] Yes [ ] No Limits enforced on order entry? [ ] Yes [ ] No Onboarding/approval followed consistently? ____ Guarantees/PPSR in place where required? ____ Actions for next year 1. ________________________________________ 2. ________________________________________ 3. ________________________________________ Owner: ______ Next review: ______
How to use it
Pull the ledger numbers from your accounting system and fill the template, then dig into the bad-debt section honestly — most write-offs share a cause, such as a control that was skipped under sales pressure. Update your credit policy to close whatever gap you find, and set concrete actions with an owner.
Use the Merion tools to quantify what slow payment is costing you, and resolve to refer overdue accounts to recovery sooner next year — letting balances age is the most common avoidable loss.
This is general business information, not legal advice.
Tips
- Review the whole credit function annually, not just individual accounts.
- Most bad debts share a cause — find it and close the gap in your policy.
- Track average days-to-pay and debtor concentration year on year.
- Set concrete actions with an owner and a next-review date.
FAQ
What should the annual review focus on?
Ledger health, the causes of any bad debts, and whether your policy and controls are actually being followed in practice.
What metrics matter most?
Average days-to-pay, the ageing profile of overdue accounts, your largest single exposure, and debtor concentration.
What is the most common avoidable loss?
Letting overdue balances age instead of escalating them. Resolve to refer accounts for recovery sooner each year.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.