Get it in writing
A completed credit application with the correct legal entity, ABN/ACN and signed terms.
Guide
How to vet a new customer before offering credit
The cheapest bad debt is the one you never take on. A few simple checks before extending trade credit prevent most problems later.
Every bad debt starts as a decision to extend credit. The most effective credit control happens before the first invoice is ever raised — at the point you decide whether, and how much, to trust a new customer. A short, consistent vetting process filters out the accounts most likely to become problems, and it costs a fraction of chasing the money later.
The essentials are straightforward: get a completed credit application with the correct legal entity name and ABN/ACN, confirm you're dealing with the entity you think you are, take trade references and follow them up, and consider a credit report for larger limits. Set an initial credit limit deliberately rather than by default, put clear terms of trade in writing, and — where the risk warrants it — ask for a personal guarantee. Do this well and recovery becomes the exception, not the routine. Our credit application template and pre-credit-check guide can help. This is general information, not legal or financial advice.
Before you extend credit
A simple vetting checklist
Check who you're dealing with
Confirm the entity, take trade references, and pull a credit report for larger limits.
Set the limit deliberately
Choose an initial credit limit on purpose, not by default.
Guarantee the risky ones
Where the risk warrants it, ask for a personal guarantee up front.
Onboarding a new account?
A few checks now prevent most recovery problems later.
Common questions
Frequently asked questions
How do I check if a new customer is creditworthy?
Get a completed credit application with the correct legal entity and ABN/ACN, confirm the entity, take and follow up trade references, and consider a credit report for larger limits.
Should I always ask for a personal guarantee?
Not always — but where the risk or the limit warrants it, a guarantee taken up front gives you a route to the director if the company doesn't pay.
What's the single most useful step?
A written credit application capturing the correct legal entity and signed terms of trade. It underpins both the credit decision and any later recovery.
Is this legal advice?
No — this is general information only. For advice on credit terms, consult a qualified adviser.
Get started
Setting up a new account?
Use our credit application template to start it right.