Business Basics Creating a Credit Application
1. HAVE ONE!
You should not be giving credit either business to business, or business to consumer without a credit application, it really is that simple.
2. Ask for everything you might need to collect later.
The application has 2 functions. First is to establish that the client is actually credit worthy. Second, the Credit Application gathers what you need to know, who you need to contact, if the client/customer goes to collections.
3. Get References
Ask for both Trade References, and Banking References. The past is almost always a good indication of the future. See how well they have managed their credit with other businesses, and how well they have managed their institutional lending.
4. Personal Guarantees
If the client cannot pay their bills through their company, a personal guarantee binds the owner to pay you, even through their business is broke. A personal guarantee is one extra layer of protection in the event that you have to go to collections.
5. Make it look professional
This sounds trivial, but a professional looking document makes a difference. It is one of those things, the more professional looking the document, the more likely it is you will not have to enforce it due to nonpayment.
6. Consider Making it public.
Consider putting your credit application on your website. The purpose of credit is to drive more business. Perhaps more people will complete the credit application, resulting in more business.