Hi guys, we see a lot of credit applications as you can imagine. Businesses think that by having new customers complete one will protect them from a bad debt or ensure the customer pays on time. And in many cases, they can. However there are some warning signs to look out for, and just because a new customer has completed one, it is no guarantee you are going to get paid. Here are red flags to be on the lookout for, and these apply only to commercial customers:
1. No credit references provided. Why? Unless they are a brand new business with literally nobody to endorse them, this is concerning. Pull your customer up on it and ask them outright why they have not completed this section.
2. Web based email addresses (gmail, hotmail, yahoo). Websites are incredibly cheap to buy and manage, often with an email address thrown in. There is just something about web based emails that seem less professional, less secure and less permanent. By no means are we suggesting having one is a bad thing or should instantly mean you decline them, however just tread carefully.
3. No landline phone number provided. Again, nothing wrong with only using a mobile, however a landline number indicates a presence and an element of security that will set you at ease.
4. Director’s Guarantee crossed out. Unless they are a massive corporation, or well known business, there should be no reason why the director of a Pty Ltd company shouldn’t complete this section. Alarm bells should go off if you see this- If the director isn’t willing to take a chance on his company, why should you? This is a massive red flag and you should always discuss your unease with your new customer before you extend them credit.
5. No signature. You would be shocked at how often we see this. The credit app is great, it is filled in completely, directors guarantee given, clause in there about late fees and debt collection costs, yet it hasn’t been signed. Guys, please, for your own sakes- do not give them credit UNLESS they have signed it. You would be shocked at how many credit applications are deemed null and void because of this simple oversight. Literally we have seen debtors walk out of court having won, simply because the creditor never got the credit application they were relying on signed.
Not everybody will agree with this and such generalisations may ruffle a few feathers, but spend a day in our shoes guys and you will soon learn the benefit of being vigilant. Cheers