Get a well formatted business credit application template that authorizes a company to investigate a customer’s creditworthiness and establish credit terms between the company and its customers.
A credit application is a document submitted by an individual or business(client) to seek a line of credit or asking for an extension of credit from a business, firm or financial institution. If you, as a business owner, want to know more about the financial situation of your client before extending credit, then this document will allow you to do so. You will be able to investigate the credit history of your client, along with their employment status and their capacity to pay back the amount they are asking you to lend.
Well-drafted credit applications, when signed by your client, whether it is an individual or another business, will help you verify the client's ability to repay you. Therefore, it is incredibly important that you rely on a professionally prepared credit application template, in order to ensure the collectability of your lending.
Our credit application template enables you to make sure all-important grounds are covered within the credit application. If you are a business owner, a credit application will not only help you protect your loan but will also elevate the possibility of repayment from the client. It is one of the most successful tools when it comes to ensuring the recovery of dues from clients.
If you are a company working in the B2B space, then credit applications can come in handy as well. It will help you mitigate the credit risk as you extend a line of credit to customers, to build a long-term relationship or rapport with them. A credit application is a contract between you and your client. A well-drafted credit application template will favour the company/lender. On the other hand, a badly made application will favour the client/borrower. Hence, it is important that your company must accommodate all available safeguards and guarantees to alleviate the risk of a client failing to pay you. . Even though you can secure a credit application from your client, this does not guarantee repayment. A credit application document will help you make a more informed decision about whether you should extend credit to a particular business or individual.
Any well-drafted credit application can serve three primary purposes:
By following a professional pro forma like the Business-in-a-Box credit application template, you will be able to obtain important information about the financial standing of the client in question. This document also works as an agreement between your company and the client, documenting all the terms and conditions regarding the credit application and receipt. The credit application is written in a manner that safeguards your interest.
The following are some of the important aspects that are necessary to include and are therefore part of a well-drafted credit application template.
You will require a few details to evaluate the creditworthiness of the client. You will also need some information if the client declares delinquency. Basic information includes the following:
Thorough verification of the basic information will help you avoid getting in business with a fraudulent company or organisation.
The next set of details that are included in a credit application are the terms and conditions that would be established and govern the lending and its remittance (Credit and Collection). Having a written agreement that clearly states how the money would be repaid and by when can make a huge difference in securing your interests as the lender.
The following are some of the most essential terms that you must include in a credit application. Our professionally crafted credit application template includes:
From the point of view of safeguarding yourself against default or delinquency on part of the client, you must include the following terms in your credit application. You can use our credit application template for guidance.
The following is a short introduction to our professionally crafted credit application template sample. You can use it to create a well-drawn credit application for your clients.
The credit application must ask the client to submit complete details about itself(business/individual).
The credit application must clearly mention what the business is among the following:
After clearly identifying who the party is, the credit application must also provide you with the following details:
The credit application must include the following contact information of the client:
The credit application must include the following financial information:
The credit application must clarify the terms of payment, including the mode/medium(s) of payment.
Usually, the modes of payment that are accepted are as under:
If you are dealing with a firm or company, it is preferable to include a clause that makes the directors of the company liable for paying the debts, in the event the company fails to. This will help you in the case that the company goes bankrupt or gets liquidated or dissolved.
Well-drafted credit application template not only serves to protect the interests of you and your company but also helps the client to easily figure out the when and how of the repayment process. Clearly laid out terms leave no room for misinterpretation or confusion, which is great for both parties. Not every client will readily agree with each clause of the credit application. However, you can easily remove or add certain parts of the agreement and alter it according to your current negotiation with a client.
To make changes so easily, it is necessary for your credit application to be extremely clear and precise. This is where our array of credit application templates come in. Sign up to get access to your credit application template and browse through our collection of over 2,000 business and legal documents.