At Admin Plus, we recognise how valuable a formalised credit application process can be. Providing credit to customers can result in further sales, increased trade, but it can also lead to risk – what if your customer can’t pay? Or won’t?
Incorporating a defined credit application is another facet of credit management, and critical for ongoing interaction with your customer. It’s also a way of screening your customers – a good, safe client versus a risky, potentially costly client? Knowing these important details means you can make an informed decision on who you do business with, and also how you manage that relationship.
Here are five reasons to establish a practical credit application process:
- With a credit application process, you know the correct legal entity of who you’re dealing with. It is imperative this information is true and accurate, for any cases of conflict or legal action.
- Based on the information provided in the credit application, you can ascertain previous trading partners, and approach for trade references.
- Ownership of the business as per the credit application form gives you the data you need to obtain financial investigative reports.
- Once the credit application is acknowledged by the customer, it means they have read, understand, and agree to abide the defined terms of trade and sale.
- Security interest is established via the Personal Properties Securities Register (PPSR), which is governed by the Personal Properties Security Act (PPSA). This is absolutely critical – in order to register your customers, you need to reference the correct legal entity, otherwise it renders any claim you may have through the register as null and void.
Essentially, you are providing your services or products free of charge – until you get paid.
If you have any questions on credit applications and the associated benefits and risks, contact Admin Plus, for all your Managed Receivables needs.