Customer credit application template

Extending credit to a customer can be useful to your business cash flow by enabling steady orders from them. But it's important to check their credit history carefully before making this business agreement to minimise the risk of bad debt.

Managing cash flow

Payment terms

It’s important to understand your customers and their needs. For example, if you are a supply chain business, managing cash flow will also be an issue for your clients. That's why you may want to offer them a trade account. By offering this credit facility, you enable your clients to pay at a later date for the goods or services you supply. In effect, you provide an interest-free loan for the payment term.

While you will lose the benefits of upfront payment, knowing when your customers will pay you will help with your cash flow management process. Offering favourable payment terms can also make you more attractive to do business with. This in turn could enable you to win or retain business.

How to avoid bad debt

When offering credit there is always the risk of bad debt. Help minimise this by completing a credit check on new customers before offering trade credit. You can do this through a credit reporting body , opens in new window , or by checking references yourself to establish payment histories. In this case, your customers provide you with bank details and trade references so you can check their payment track record.

To do this, simply customise our customer credit application template (DOC, 56KB) , opens in new window . It allows you to stipulate the conditions of your business agreement (such as the date you require payment each month). Please note that the template is a guide only, and you should seek professional advice before making any decision that could affect your business.