A Mumbai-based FMCG distributor network with operations across western India faced increasing credit risk exposure due to rapid expansion into new markets.

Credit approvals were largely relationship-based, resulting in:

• Inconsistent credit limits
• Weak documentation
• Rising overdue payments

Finvigil Insights was engaged to design and implement a formal Credit Policy Framework.

Key Challenges

The company lacked:

• Defined credit eligibility criteria
• Structured approval hierarchy
• Standard documentation requirements
• Risk-based credit limits

Additionally, sales teams were often granting credit without finance approval.

Finvigil Solution

Finvigil implemented a three-layer credit governance system.

1. Credit Risk Scoring

Customers were evaluated using a proprietary scoring model including:

• Financial strength
• Payment history
• Industry risk
• Market reputation

2. Credit Approval Matrix

3. Documentation Framework

Mandatory documentation included:

• Financial statements
• GST compliance verification
• Bank reference checks
• Trade references

Outcomes

Within one year:

• Overdue receivables declined by 42%
• Bad debts reduced by 65%
• Credit approval cycle reduced from 14 days to 5 days

Strategic Insight

A formal credit policy converts credit decisions from intuition into structured risk management.