New Open Account Welcome and Terms Letter Template

In plain language: Welcomes the customer by name, identifies the supplier, and formally confirms that an open account has been approved and activated.

Common mistake: Addressing the letter to a generic contact title like 'Accounts Payable' instead of a named individual — impersonal letters are more likely to be filed without being read.

In plain language: States the maximum outstanding balance the customer is authorized to carry on the account at any time.

Common mistake: Omitting the credit limit entirely and relying on verbal agreements — without a written limit, enforcing it when a customer over-orders is difficult.

In plain language: Specifies when payment is due, calculated from the invoice date, and the accepted payment methods.

Common mistake: Stating 'due upon receipt' instead of a specific net-day term — recipients interpret this differently and it makes follow-up on late payments harder to standardize.

In plain language: Describes the interest or service charge applied to balances not paid by the due date, expressed as a monthly or annual rate.

Common mistake: Omitting the late fee provision and adding it later in a collection letter — customers who were not told about fees upfront often dispute them, delaying payment further.

In plain language: Explains how the customer should place orders, how invoices will be delivered, and any purchase order requirements.

Common mistake: Leaving out PO number requirements — if your customer's AP system requires a PO to process payment and you haven't asked for one, your invoice will sit unpaid until re-issued.

In plain language: Reserves the supplier's right to review, increase, reduce, or suspend the credit limit based on payment history or changed financial circumstances.

Common mistake: Omitting this clause — without it, customers may assume the credit limit is permanent and take exception when it is revised following late payments.

In plain language: States the fee charged for returned checks or failed electronic payments and any consequences for the account.

Common mistake: Failing to include a returned payment clause — without a disclosed fee and consequence, charging one after the fact may be legally challenged in some jurisdictions.

In plain language: Expresses appreciation for the new business relationship, invites the customer to contact the company with questions, and provides the AR contact's name and details.

Common mistake: Ending the letter without a named contact — customers with billing questions will call a general line instead of AR, slowing resolution and delaying payment.

It is a formal business letter sent to a newly approved customer confirming that a trade credit account has been opened and setting out the specific terms — credit limit, payment due date, late fees, and ordering procedures — under which the customer may purchase on account. It serves as both a relationship-building welcome and a written record of the agreed credit conditions.

Send it immediately after approving the customer's credit application and before any goods or services are shipped on account. Sending it ahead of the first order ensures the customer's AP team knows the payment terms before the first invoice arrives. It is also appropriate when upgrading an existing cash customer to open-account status.

No signature is required from the customer for this letter to be effective in most business-to-business contexts. The letter documents the terms the supplier is offering; the customer's acceptance is typically implied when they place their first order on account. If you want an explicit acknowledgment, you can add a signature line and request that the customer return a signed copy, but this is not standard practice.

Start conservatively for new customers with limited payment history with your company. A common approach is to set the initial limit at one to two times the customer's expected monthly order value, typically $5,000–$25,000 for small to mid-sized B2B accounts. Include a credit review clause that allows you to increase the limit after 90 days of on-time payments.

Net 30 is the most common standard in North American B2B trade. Net 15 is typical for smaller or newer accounts with less established credit history. Net 45 and Net 60 are sometimes required by larger corporate buyers or government purchasers. Always state a specific net-day term rather than an open-ended phrase like 'due upon receipt.'

Yes, in most jurisdictions, provided the late fee rate was disclosed to the customer in writing before the account was used. This welcome letter is the appropriate place to disclose that fee. Typical rates are 1%–2% per month on the outstanding balance. Check your jurisdiction's usury or consumer-protection rules to confirm the maximum allowable rate for commercial accounts.

A welcome letter is a concise, readable business letter that confirms account approval and summarizes key terms in plain language. A credit agreement is a formal multi-page legal contract with detailed covenants, security interests, and default provisions. For most small to mid-sized B2B trade credit relationships, a well-drafted welcome letter is sufficient. Larger credit exposures — typically above $50,000 — may warrant a formal credit agreement reviewed by legal counsel.

Email is standard for most B2B open accounts today and ensures the letter reaches accounts payable quickly. Send a PDF attachment rather than pasting the text into the email body so the customer can file it easily. For high-value accounts or customers with formal procurement processes, send both email and a physical copy by post and request a read receipt or written acknowledgment.

Respond in writing promptly, referencing the specific clause in the letter. If the dispute involves a genuine miscommunication from the credit approval process, issue a corrected letter with the agreed terms before any orders are shipped. Do not ship goods on account until the terms are confirmed in writing. For significant term changes, note them as an amendment to the original letter with both parties' initials.