Elements of Credit Policy:
1. Cash Discounts: Lowers price. Attracts new customers and reduces DSO.
2. Credit Period: How long to pay? Shorter period reduces DSO and average A/R, but it may discourage sales.
3. Credit Standards: Tighter standards tend to reduce sales, but reduce bad debt expense. Fewer bad debts reduces DSO.
4. Collection Policy: How tough? Tougher policy will reduce DSO but may damage customer relationships.