Inquiry on New Customer Credit Template

In plain language: Captures the legal name, trading name, business structure, registration number, and principal address of the company applying for credit.

Common mistake: Accepting a trade name without the registered legal entity name. If a collection action becomes necessary, you need the legal name to file suit or register a judgment.

In plain language: Identifies the individual signing the inquiry on behalf of the applicant company and confirms their authority to bind the company to the information and consents provided.

Common mistake: Leaving the representative's title blank or accepting a signature from a person without documented signing authority. An unauthorized signature may render the credit authorization consent unenforceable.

In plain language: States the specific payment terms the applicant is requesting — net days, credit limit amount, and preferred billing cycle — so the seller can evaluate the request against the applicant's profile.

Common mistake: Omitting the credit limit request and evaluating an open-ended line. Without a stated limit, the seller has no benchmark against which to approve or counter-propose.

In plain language: Requires the applicant to list at least three current suppliers or creditors who can speak to the applicant's payment history and reliability.

Common mistake: Accepting only one or two references, or allowing the applicant to list sister companies or related parties. Independent references from unrelated creditors are the only ones that provide meaningful risk information.

In plain language: Requests the applicant's primary banking institution details so the seller can request a bank reference letter confirming the account standing and average balance range.

Common mistake: Skipping the bank reference because it feels intrusive. A bank reference is one of the most reliable indicators of liquidity and is standard practice in B2B trade credit.

In plain language: A signed consent from the applicant explicitly authorizing the seller to obtain a third-party commercial credit report from a credit bureau on the applicant company and, if applicable, its principals.

Common mistake: Running a credit bureau report without written authorization. In most jurisdictions, obtaining a credit report without a permissible purpose and written consent violates consumer and commercial credit reporting laws and can result in regulatory penalties.

In plain language: Requests key financial indicators — years in business, annual revenue range, and whether the applicant has any outstanding judgments, liens, or bankruptcies — to supplement the reference check.

Common mistake: Not asking about prior bankruptcies or outstanding liens. A customer with an undisclosed recent bankruptcy presents a materially different risk profile — and the inquiry is the only standardized opportunity to capture this disclosure.

In plain language: Confirms that the applicant has read and agrees to the seller's standard payment terms, late-payment interest rate, and collection cost provisions that will govern the account if credit is approved.

Common mistake: Stating the interest rate as a monthly figure only without disclosing the annualized rate. Several jurisdictions require the annual equivalent to be disclosed for the interest clause to be enforceable.

In plain language: A declaration by the authorized representative that all information provided is accurate and complete, followed by dated signatures from the applicant and, optionally, a personal guarantor.

Common mistake: Not dating the signature. An undated authorization creates ambiguity about when consent was granted, which matters if the credit report is pulled weeks after the form was signed.

An inquiry on new customer credit is a formal document a seller sends to a prospective business customer to collect the financial and reference information needed to evaluate a trade credit application. It captures business identity, trade references, banking details, and a signed authorization to conduct a credit check. It is the first step in a structured credit-approval process and creates a documented record of due diligence before any open-account terms are extended.

Extending trade credit without a credit inquiry creates unquantified accounts-receivable exposure. The inquiry process allows the seller to verify the customer's legal identity, assess payment history through independent references, obtain a commercial credit bureau report, and confirm liquidity through a bank reference — all before shipping goods or delivering services on open-account terms. It is the primary mechanism for controlling bad-debt losses in B2B trade.

The inquiry itself is not a credit agreement, but the signed clauses within it — particularly the credit check authorization, the financial information certification, and the payment terms acknowledgment — are generally enforceable as written consents and representations. The authorization to pull a credit report is legally significant in most jurisdictions and must be signed before a bureau report is obtained. Consult a lawyer if you intend to rely on the form's provisions in a collection or dispute context.

Three independent trade references is the standard minimum in commercial credit practice. All three should be from unrelated, arm's-length suppliers — not sister companies, subsidiaries, or affiliated entities. For larger credit limits (above $25,000), four to five references are common. Each reference should include the contact name, phone number, credit limit extended, payment terms, and approximate payment performance.

You may request a personal guarantee and, with separate written authorization from the individual, obtain a personal credit report — but only if the individual explicitly consents in writing to a personal credit check. Business credit and consumer credit are governed by different legal frameworks. In the US, personal credit reports are strictly regulated by the Fair Credit Reporting Act; pulling one without specific written consent from the individual is a violation regardless of whether a business credit authorization has been signed.

A widely used starting point is to approve 10–15% of the customer's stated annual revenue or the average credit limit their trade references report extending — whichever is lower. For a brand-new relationship with limited reference data, starting at 50% of the requested limit and increasing after 90 days of on-time payment is a conservative approach that limits initial exposure while building payment history.

A customer who declines to provide references, authorize a credit check, or disclose basic financial information is signaling elevated risk. In that situation, the standard options are to require cash-in-advance or prepayment for all orders, offer a secured credit line backed by a personal guarantee, or decline to extend credit entirely. Extending open-account terms to a customer who will not cooperate with standard due diligence is rarely justified by the potential revenue.

Notarization is not required for a credit inquiry form in most jurisdictions. A dated wet signature from an authorized representative is sufficient for the credit check authorization and payment terms acknowledgment to be valid. If you are also requiring a personal guarantee from a business owner, some jurisdictions or lenders may prefer — but do not legally require — notarized guarantees for larger credit exposures.

Best practice is to retain completed credit inquiry forms for the life of the customer account plus a minimum of seven years after the account is closed. This aligns with standard commercial record-retention guidelines and provides documentation for any collection action, audit, or regulatory inquiry that arises after the account is closed. Store digital copies linked to the customer record in your accounting or ERP system.