Credit Limit: This is the highest credit limit that the debtor is permitted to utilise. This aids in managing and controlling the creditor’s credit exposure.
Repayment Terms: Outlines the due date for repayments throughout the course of the credit period. Additionally, the agreements specify if late payment fees or early payment incentives are applicable.
Interest Rates: The conditions of credit may specify the interest rates that apply to past-due amounts, if applicable. This covers the expense of credit extension for the creditor and encourages prompt payments.
Credit Review Terms: Indicates if credit conditions will be evaluated on a regular basis in light of the debtor’s creditworthiness and financial standing.
Credit applications and terms of credit are essential tools for businesses engaging in credit transactions. They provide a structured framework for assessing creditworthiness, managing credit relationships, and minimising the risks associated with extending credit. Clear and transparent communication through these documents helps establish trust and a mutually beneficial financial relationship between parties involved.
Does your business currently extend credit and/or are you looking at formalising a supply of goods to clients on credit? Protect yourself and your business – ensure you are contractually set up to ensure the best possible chance of being repaid.
Don’t open yourself up to risk. Order a Credit Application Contract from Arrow White Online today!
If you have any general questions or require legal advice, please contact us and we can refer you to a specialist Australian lawyer.