Credit Application Checklist — What to Ask New Customers

Why credit checks matter

A customer who cannot or will not pay is the same as a customer who was never there — except you have already supplied the goods or services. Proper upfront checks let you make an informed decision about whether to extend credit, how much, and on what terms. They also give you the information you need to recover the debt if it becomes necessary.

The checklist

1. Credit application form (signed)

• Full legal name of the entity (company, trust, partnership, or sole trader)
• ABN / ACN
• Registered business address and trading address
• Directors' full names and contact details (for personal guarantee purposes)
• Accounts payable contact name, email, and phone
• Credit limit requested
• Authorised signatory signature and date
• Agreement to your terms and conditions of credit (attach your terms to the application)

2. ABN verification

• Look up the ABN on the ATO's ABN Lookup tool (abr.business.gov.au)
• Confirm the entity name matches what the customer has provided
• Confirm the ABN is active (not cancelled)
• Check the entity type — company, sole trader, trust, partnership, etc.
• For companies: verify on ASIC Connect that the company is registered and the directors stated are current

3. Trade references

• Request at least two trade references from existing suppliers (not the customer's own related entities)
• Call each reference directly — do not rely on written references alone
• Ask: How long have you traded with them? What credit limit did you extend? Do they pay on time? Have they ever exceeded the limit or had any disputes?
• Be cautious if the customer is unable to provide references or provides references that cannot be verified

4. Credit bureau check

• For credit limits above $5,000 (or lower if your industry warrants it), run a credit report
• Bureaux include Equifax, Illion, and CreditorWatch
• Look for: court judgments, payment defaults, ASIC adverse actions, previous administrations or liquidations
• For sole traders and personal guarantors, consider a personal credit check (requires the individual's consent)

5. Personal guarantee

• For company customers, require a signed personal guarantee from the director(s)
• The guarantee should be in writing, signed by the guarantor in the presence of a witness
• The guarantee should be unlimited (covering all current and future debts) and continuing (not discharged by partial payment)
• Strongly recommended for any credit limit above $5,000

6. Bank reference (for large limits)

• For significant credit limits (typically $20,000+), consider requesting a bank reference
• A bank reference confirms the customer has an account in good standing — it does not confirm their balance or creditworthiness in detail
• Useful as a further data point alongside trade references and a credit bureau check

7. Credit terms sign-off

• Ensure the customer has signed your terms and conditions of credit before you supply anything on credit
• A signature on the credit application, with the terms attached, is the standard approach
• Keep a copy of the signed application and terms on file — you will need them if the matter ever goes to court
• Use our credit terms template as a starting point

Setting the initial credit limit

After completing the above checks, set a conservative initial credit limit. Use our credit limit suggester as a guide. Start lower than you think you need to — you can always increase the limit once the customer has demonstrated they pay reliably. It is much harder to reduce a limit once a customer has come to rely on it.

Ongoing monitoring

Credit risk is not a set-and-forget exercise. Review your customers' credit limits at least annually, and immediately if you notice any of the following: late payments, dishonoured cheques or EFTs, requests for extended terms, news of financial difficulty, or changes in the business's structure or ownership.

CreditorWatch and similar services offer automated monitoring that alerts you to adverse events (court judgments, ASIC notices, payment defaults) against your debtors — worth considering for your larger accounts.

Related tools: Commercial credit application template · Credit terms template · Credit limit suggester

This checklist is provided for general guidance only and does not constitute legal or financial advice. Credit risk practices vary by industry and business size. Seek professional advice if you are unsure what checks are appropriate for your circumstances.