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How to Use a Credit Application to Keep Your Business Safe

Today, I want to cover a crucial step in managing you’re accounts receivable:

The importance of having your customers fill out a credit application.

I’m surprised how many of our clients still don’t take this step.

I know what you’re thinking, why do I need another step in my customer onboarding process?

The answer is you want to reduce losses due to delinquent accounts.”

“Credit applications are your first line of defense. By getting essential information upfront, you’re setting the stage for a better receivable picture.

A credit application collects data like 

who are the owners of the company, their contact information, their banking information, their payment history & credit references, This information is vital. You can not only assess the creditworthiness of potential customers but this information will be very helpful should a collection problem arise.

Furthermore, you can also establish your terms. When is payment due, what’s the interest rate they will be charged if they are past due and maybe even insert a personal guarantee should you feel it’s warranted.

By knowing your customer’s financial health beforehand, you can tailor your credit terms and offer appropriate credit limits and payment terms that align with their capacity. The result? Fewer late payments and reduced delinquent accounts.”

Think of a credit application as a shield that helps protect your business against potential financial losses. It’s not just about denying credit; it’s about smart, informed lending that benefits both parties.”

It will help you make informed decisions, foster trust, and ultimately, lead to healthier business relationships. Don’t overlook this crucial step in safeguarding your business’s financial health.”