Why you need a credit policy, not just common sense
Selling on credit is normal in Swiss B2B: regular customers, multi-month projects, recurring supplies. Without clear rules, however, revenue grows while liquidity thins out. A well-defined credit policy is not about saying "no" to customers, but about deciding in advance how much risk to accept, with which guarantees and under which conditions — before the order is confirmed.
In Switzerland, B2B commercial relationships are governed primarily by the Code of Obligations (CO): sales contract (Art. 184 et seq.), default (Art. 102 et seq.), default interest (Art. 104) and termination for breach (Art. 107 et seq.). There is no "universal right to credit": unless otherwise agreed, the seller may require advance payment or refuse deliveries if the customer is in default on previous invoices.
This guide proposes an operational model for SMEs and sole proprietors: customer assessment, exposure limits, guarantee instruments, contractual terms and collection process — with an eye on accounting and reporting, because an uncollected receivable remains a risk until it is classified, monitored and, if necessary, written down.
The four pillars of a B2B credit policy
An effective policy balances commercial growth and working capital protection. These four elements work together:
1. Assessment and classification
Before granting payment terms, collect identifying data (UID, registered office, contact persons), verify legal existence in the Commercial Register and consult risk sources such as ZEK, CRIF or commercial information. Assign each customer to a tier (A/B/C) with documented criteria.
2. Exposure limits
Define a maximum open credit limit per customer, calculated on outstanding invoices plus confirmed but unbilled orders. The limit may be based on historical revenue, declared net assets or a percentage of your own working capital allocable to commercial risk.
3. Guarantees and terms
For new or high-risk customers, provide for advance payments, security deposits, bank guarantees, pledges on goods or retention of title (Eigentumsvorbehalt) until full payment. Terms must appear in the GTC, on the order or in the framework contract.
4. Monitoring and collection
Automate reminders, delivery suspensions and limit reviews. A receivable 30 days overdue is not an "incident": it is an operational signal requiring action before the legal collection phase or the debtor's bankruptcy.
How to calculate credit limits without blocking sales
The limit is not a fixed figure for everyone: it is a function of risk profile and commercial potential. Here is a reference grid adaptable to Swiss SMEs:
| Customer tier | Typical criteria | Indicative limit | Payment terms |
|---|---|---|---|
| A — Low risk | Regular history > 12 months, solid company, no protests | Up to 15–20% of the customer's annual revenue or CHF 50,000+ | Net 30 or Net 45 |
| B — Medium risk | New customer with references, SME without public accounts | First order max CHF 5,000–10,000, then quarterly review | Net 30 or 50% advance |
| C — High risk | Recurring delays, volatile sector, incomplete information | Advance payment or cash on delivery only | Prepayment or payment on delivery |
| D — Block | Active protests, insolvency proceedings, default > 60 days | CHF 0 — no new deliveries | Collection of existing receivables only |
Practical rule: total exposure to all tier C customers should not exceed 5–10% of net working capital. If you exceed this threshold, you are transferring your company's liquidity risk to the customer.
Guarantees and protection instruments under Swiss law
Guarantees turn a payment promise into an enforceable right or a real encumbrance on the goods. For SMEs, these are the most commonly used instruments:
Retention of title (Eigentumsvorbehalt)
Provided for in Art. 715 CC, it allows you to retain ownership of the goods until the price is paid in full. It must be agreed in writing and registered in the public register kept by the debt enforcement office at the buyer's current domicile — ideally in the GTC accepted by the customer. In the event of insolvency, delivered goods that remain identifiable may be reclaimed, protecting the seller against other creditors.
Note: retention of title is effective only if the goods remain identifiable and have not been transformed or resold. For fungible goods or goods integrated into production processes, consider alternative guarantees.
Security deposit and advance payment
On a contractual basis, a security deposit binds a sum as guarantee of performance. Advance payment on high-value orders reduces exposure from the outset. For bespoke projects, it is standard practice to request 30–50% on order and the balance on delivery or within 10–30 days.
From an accounting perspective, advance payments received are liabilities (amounts owed to customers) until the final invoice is issued — they must be tracked separately from revenue.
Bank guarantee and pledge
A bank guarantee (Art. 492 et seq. CO) commits a bank to payment in the event of the customer's default — useful for public contracts or long-term agreements. A pledge (Art. 884 et seq. CC) encumbers specific movable assets; it is less common in ordinary B2B but relevant for equipment or stock held at the customer's premises.
Both instruments involve costs and administrative lead time: reserve them for contracts above an internally defined threshold (e.g. CHF 25,000).
Sales terms: what to include in GTC and contracts
General Terms and Conditions (GTC) are the first line of defence. They must be accepted by the customer — in writing or via an order confirmation that refers to them — and contain at least these elements:
- →Payment terms: net due date (e.g. 30 days from invoice date), with no implied extensions. Specify that the term runs from the date of issue, not from receipt.
- →Default interest: Art. 104 CO provides for 5% per annum on monetary obligations; you may agree a higher rate if justified and not usurious.
- →Reminder and collection costs: provide for reimbursement of administrative and legal costs in the event of delay beyond a threshold (e.g. 10 days).
- →Right of suspension: reserve the right not to deliver further goods or services if outstanding invoices remain unpaid — right of exception for non-performance (Art. 82 CO).
- →Jurisdiction: specify the court at your commercial domicile or an arbitrator, to avoid disputes over jurisdiction.
For strategic customers, a framework contract with annual review of the credit limit is more flexible than standard GTC and signals professionalism — not rigidity.
Dunning process: stopping the damage without burning the relationship
A structured process reduces collection times and communicates clarity to the customer. Recommended scheme for SMEs:
| Stage | Timing | Action | Operational effect |
|---|---|---|---|
| Reminder | 7 days before due date | Automated email with account statement | Prevents administrative oversights |
| Reminder 1 | +7 days from due date | Formal email, collaborative tone | Signals attention to detail |
| Reminder 2 | +21 days from due date | Registered letter + sales call | Suspension of new orders |
| Reminder 3 | +35 days from due date | Formal notice with 10-day final deadline | Initiation of litigation or assignment to collection agency |
| Legal collection | +45–60 days | Payment order (Art. 67 et seq. DEBA) or bankruptcy | Classification of receivable as probable loss |
The payment order under the Federal Act on Debt Enforcement and Bankruptcy (DEBA) is the fastest instrument for initiating compulsory collection in Switzerland: the debtor has 10 days from notification to file an objection. Document every stage in your ERP: reminder date, channel, customer response. In the event of a dispute, traceability is decisive.
Accounting impact: receivables, write-downs and liquidity
A well-managed credit policy is reflected directly in the balance sheet. Under Swiss accounting standards (FER / Swiss GAAP FER), trade receivables are recorded at nominal value, but must be written down if recovery is doubtful (prudence principle, FER 2).
Best practices for SMEs:
- ✓Monthly aging report: classify receivables by due date bands (0–30, 31–60, 61–90, 90+ days) and compare against internal limits.
- ✓Allowance for doubtful accounts: provide for a flat-rate write-down (e.g. 5% on 90+ day receivables, 100% on receivables in insolvency proceedings).
- ✓DSO (Days Sales Outstanding): monitor average collection days. A rising DSO with stable revenue indicates that the credit policy needs review, not that "customers pay badly in general".
- ✓Weekly bank reconciliation: match each payment to the corresponding invoice to immediately identify partial payments or errors.
With a tool like Accountex, you can automate aging, generate reminders and have a real-time view of exposure per customer — turning the credit policy from a static document into a daily process.
Implementation in 5 steps: from theory to practice
Document the internal policy
A 2–3 page document with classification criteria, limits per tier, standard terms and dunning process. Share it with sales, administration and management.
Update GTC and invoice templates
Include payment terms, retention of title, default interest and jurisdiction. Every invoice must show the exact due date and a reference to the GTC.
Configure limits in your ERP
Set a "credit limit" field for each customer and an automatic block (or alert) when a new order exceeds the permitted exposure.
Automate reminders and reports
Schedule pre-due reminders and progressive dunning. Generate an aging report at the end of each month for management.
Quarterly review
Reassess customer limits based on payment behaviour. A customer who always pays early may move up a tier; one with two consecutive delays moves down or is blocked.
Quick checklist: is your credit policy complete?
- ☐Every B2B customer has a documented risk tier (A/B/C/D)
- ☐A maximum open credit limit per customer exists, verified before every order
- ☐GTC include retention of title, default interest and right of suspension
- ☐New customers above CHF 10,000 have a Commercial Register check or risk report
- ☐The dunning process is automated with at least 3 levels
- ☐The aging report is generated monthly and discussed in management meetings
- ☐Receivables over 90 days have an allowance or write-down
- ☐The sales team knows the criteria and can explain the terms to customers
A credit policy is not an obstacle to sales: it is the system that allows you to sell with confidence. Defining clear limits, adequate guarantees and a disciplined collection process protects Swiss SME liquidity and frees the sales team from deciding case by case under pressure.