Credit Application Template
Make the form you hand a new customer who wants to buy on account. Add your business name and logo, the payment terms you offer, and choose the blocks: owners, bank reference, up to five trade references, a personal guarantee and an authorization to check credit. The preview is the blank form, ready to print or save as a PDF.
A template, not legal advice. It does not make any agreement valid or enforceable; have a lawyer review the wording you use.
What a business credit application asks
Business information
Legal name and trade name, address, phone, email and website, tax ID, the type of business, the year it started and who in accounts payable gets your invoices.
Owners or officers
Who owns or runs the business, their title and share. It tells you who you are dealing with and who could sign a guarantee.
Bank reference
The bank, branch, a contact and the account, so you can confirm the account exists and is in good standing.
Trade references
Other suppliers who sell to the applicant on credit. Ask for as many as you will actually call; the template prints up to five.
Credit requested and terms
The limit the customer asks for, expected monthly purchases, the payment terms you offer (Net 30, for example) and whether invoices need a PO number.
Signature, authorization, guarantee
The applicant signs to confirm the details and allow you to contact the references. An optional personal guarantee adds an owner's signature.
How to check a credit application
Start with the trade references, because they show how the customer actually pays. Ask each one the same questions: how long the applicant has been a customer, the credit limit and highest balance, the terms, and whether invoices are paid on time or how many days late. A reference who pays on time with one supplier and 30 days late with another tells you more than any single answer.
Then call the bank with the signed application and ask what it can confirm: how long the account has been open and whether it is in good standing. Add a business credit report if you use one. Set the first limit on what you have checked, not on what was asked for, and review it after a few months of payments.
In the US, the Equal Credit Opportunity Act and Regulation B cover business credit too. For trade credit, Regulation B says to tell the applicant your decision within a reasonable time, and to give the reasons in writing if the applicant asks for them within 60 days. Use the same form and the same checks for every applicant.
Approved? Take the first order with the order form template.
Onboarding a service client rather than a buyer on account? The client intake form template collects what a project needs.
Credit terms you will see on the form
- Net 30
- The full invoice is due 30 days after the invoice date. Net 15, 45 and 60 work the same way with other day counts.
- 2/10 net 30
- The customer may take 2% off when paying within 10 days; otherwise the full amount is due in 30.
- COD and CIA
- Cash on delivery, or cash in advance: no credit at all. An option for a customer whose references do not check out.
- Credit limit
- The most the customer can owe you at one time. Orders above it wait until a payment comes in, or need approval.
- Personal guarantee
- An owner promises to pay the business's debt personally if the business does not.
Tips for a credit application that works
Only ask what you will check
Every field slows the customer down. If you never call the bank, drop the bank reference and ask for one more trade reference instead.
Print your terms on the form
Put the payment terms and your terms and conditions, such as late charges, on the application the customer signs, so nobody hears about them for the first time on a reminder.
Keep it with the account
File the signed form with the customer record and ask for an updated one when the business changes owners or asks for a much higher limit.
Same process for everyone
Use the same form, the same reference questions and the same rules for setting limits, and note why you decided what you did.
More for people who sell to businesses on account: how an industrial distributor works, distributor sales, contract negotiation.
Sources
The reference check is a phone call
A trade reference tells you on the phone how the customer pays, or the buyer explains why they need Net 45. ParrotNotes records the call, transcribes it and summarizes it, so the answers go in the customer's file as they were said.
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