Credit application for customers 

Why use a credit application? 

A credit application helps your business to check if your customer can pay on time, reducing the risk of unpaid debts. It also gathers essential information to make smart credit decisions, protecting the company's finances. Below are some best practices and an example of a credit application that you can use as guide to setting up your own.  

Best Practices for Managing Credit Applications?

To streamline and safeguard your credit application process, follow these essential steps: 

1. Develop a credit policy: 
   1. Set clear approval criteria, including credit scores, your business's financial health, and the customer's payment history. 
   2. Define who in your company can approve credit applications. 
   3. Regularly review and update the credit policy. 
2. Gather Comprehensive Information: 
   1. Collect detailed information about the customer, including their legal name, business structure, contact information, and references. 
3. Check Customer’s Credit History: 
   1. Conduct credit checks to assess the customer's creditworthiness.  
4. Set clear payment terms: 
   1. Define clear credit terms, including payment due dates, interest on late payments, and credit limits based on the customer's credit score. 
5. Obtain Personal Guarantees: 
   1. For small or new businesses, consider obtaining a personal guarantee from the owner to secure the debt. 
6. Verify References: 
   1. Contact trade references and review the customer’s payment history with other suppliers. 
7. Review Credit Limits Regularly: 
   1. Periodically review and adjust credit limits based on the customer's payment history and current financial situation. 
8. Communicate with Customers: 
   1. Regularly check in with customers, ensuring they understand their credit terms and offering resources to help manage their credit effectively. 
9. Ensure Legal Compliance: 
   1. Ensure that your credit application complies with all relevant laws and regulations, including data protection laws. 
10. Document Everything: 
    1. Keep clear records of all communication and agreements related to credit applications. 
       
       

Credit application template 

Below is an example of a very basic credit application template. You can enhance this and make it more relevant and suitable for your business needs.  

 

Credit Application Template 

Company Name: 

_________________________________________ 

 

Billing Address: 

_________________________________________ 

City: ___________________ State: ___________ Post Code: _____________ 

Phone Number: ___________________  

Email: _____________________________________________ 

 

Type of Business: 

[ ] Sole Proprietorship 

[ ] Partnership 

[ ] Corporation 

 

Year Established: ______________________ 

ABN/CAN/BN: __________________________ 

 

Principal Owners/Officers: 

Name: ___________________________ Title: ______________________ 

Name: ___________________________ Title: ______________________ 

Name: ___________________________ Title: ______________________ 

 

Trade References: 

1. Company Name: ___________________________ Contact: _______________
   Address: _______________________________________________________ 
   Phone Number: ___________________ Email: ________________________ 
   
   
2. Company Name: ___________________________ Contact: _______________
   Address: _______________________________________________________ 
   Phone Number: ___________________ Email: ________________________ 
   
   
3. Company Name: ___________________________ Contact: _______________
   Address: _______________________________________________________ 
   Phone Number: ___________________ Email: ________________________ 

 

Credit Amount Requested: $____________________ 

 

Terms Requested: 

[ ] Net 30 Days 

[ ] Net 60 Days 

[ ] Other: ___________________ 

 

Personal Guarantee: 

I, ________________________, residing at ___________________________, for and in consideration of your extending credit at my request to ______________________ (hereinafter referred to as the "Company"), personally guarantee to you the payment of any obligation of the Company and I hereby bind myself to pay you on demand any sum which may become due to you by the Company whenever the Company shall fail to pay the same. 

 

Signature: ____________________________ Date: ________________ 

 

Authorization to Obtain Credit Information: 

I authorize _______________________ (Your Company Name) to obtain credit information from the references listed above and from credit reporting agencies. 

 

Signature: ____________________________ Date: ________________ 

 

 

What’s next?  

Find out other documentation from Wiise Learning: Sales & Receivables. 

 

If you have any questions reach out to support@wiise.com