Credit Application Form NZ: What To Include

Jess runs a wholesale coffee supply business in Wellington. A new cafe wants a trade account for $8,000 a month of beans, cups and cleaning products, with payment 30 days after invoice. Jess wants the sale, but she also wants to know who she's dealing with and what happens if the cafe doesn't pay.

That's exactly where a good credit application form helps. It lets you assess the customer before you offer credit, and it can also lock in the terms that apply once you approve the account.

The trick isn't treating it as just an admin form. If you're offering trade accounts in New Zealand, your credit paperwork should bring together customer checks, payment terms, guarantees, PPSR security, interest, recovery costs and privacy notices in one clear process.

What Is A Credit Application Form In New Zealand?

A credit application form is the document your customer completes when they ask to buy goods or services now and pay later. In practice, it's your first line of protection before you open a trade account.

For example, if you supply building materials, food products, office supplies, equipment, uniforms or software services on invoice, you're effectively giving your customer short-term credit. That means you need enough information to decide whether you're comfortable with the risk.

A strong customer credit application in New Zealand usually does three jobs:

• Collects customer details, so you know exactly who is applying and who will be liable for the account.
• Gets permission for checks, such as trade references, identity checks and credit checks where appropriate.
• Connects the customer to your terms, so your payment dates, interest, guarantees and other protections are accepted before you supply on credit.

This is different from a simple order form. An order form records what the customer wants to buy. A credit application asks whether you'll allow that customer to buy on account at all.

It's also worth separating cash customers from credit customers. If someone pays upfront every time, you may only need basic trading terms. If you let them pay later, the paperwork needs to be more careful because you're taking on non-payment risk.

What Should You Ask For In A Customer Credit Application?

You should ask for enough information to identify the customer, check their creditworthiness and contact the right people if invoices aren't paid. The exact information depends on whether your customer is a company, partnership, sole trader, trust or other organisation.

For a New Zealand company customer, it's sensible to ask for:

• the full legal company name, not just the trading name
• the New Zealand Business Number, if they have one
• the Companies Office company number
• registered office and trading address
• director names and contact details
• accounts payable contact details
• estimated monthly credit needed
• trade references
• bank details for verification, where appropriate

For sole traders and partnerships, you'll usually need the person's full legal name, trading name, address and contact details. This matters because a trading name isn't usually the legal person that owes you money.

Say Jess approves a cafe called Morning Lane Coffee. If the legal customer is actually Morning Lane Coffee Limited, the company is the debtor. If it's a sole trader using that name, the individual may be personally liable. Getting this wrong can make unpaid invoices much harder to deal with.

You should also ask the customer to confirm that the information they give you is true and complete, and that the person signing has authority to bind the customer. If the form is signed by a junior staff member without authority, you may run into arguments later about whether the terms were accepted.

Should Your Credit Application Include Terms Of Trade?

Yes, your credit application should usually be paired with your terms of trade or credit application terms, either in the same document or as clearly incorporated terms. This is what turns a form into a business credit agreement that actually sets out the rules of the account.

Your trade account terms should be accepted before you supply goods or services on credit. If you send terms only after the sale, or bury them on an invoice after delivery, you may have a harder time showing the customer agreed to them.

A practical set of trade account terms in New Zealand should cover:

• Payment timing, such as 7 days, 14 days, 20th of the month following invoice, or 30 days after invoice.
• Credit limit, including your right to set, reduce, suspend or cancel it.
• Orders, including who can place them and when you can refuse them.
• Delivery and risk, including when risk in goods passes to the customer.
• Retention of title, if you want ownership of goods to stay with you until payment.
• Interest and costs, if you want to charge these on overdue amounts.
• Personal guarantees, if directors or owners are backing the customer's obligations.
• PPSR wording, if you're taking a security interest in goods supplied or other collateral.
• Privacy notices, so you can collect and use personal information properly.

Templates can be a useful starting point, but they often miss the clauses that make a difference for your industry. A supplier of perishable food, for example, needs different return and delivery wording from a supplier of machinery parts or building products.

Can You Ask For A Personal Guarantee?

Yes, you can ask for a personal guarantee, but it needs to be clear, properly signed and used carefully. A personal guarantee means an individual, often a director or owner, promises to pay if the customer doesn't.

This can be especially useful when you're dealing with a small company with limited trading history. A company is a separate legal entity under the Companies Act 1993, so a director usually isn't automatically liable for company debts just because they're a director. A guarantee is the document that creates that personal responsibility.

For example, Jess approves Morning Lane Coffee Limited for a $10,000 credit limit. The company's two directors sign personal guarantees. If the company later leaves $6,500 unpaid, Jess may be able to look to the guarantors as well as the company, depending on the guarantee wording and the circumstances.

Your guarantee wording should make clear:

• who the guarantor is
• which customer's obligations are guaranteed
• whether the guarantee covers all amounts owing or only a capped amount
• whether interest, fees and recovery costs are covered
• whether the guarantee continues for future orders
• how the guarantee can be ended for future credit, if at all

Don't hide a guarantee in fine print. If a person is taking on personal liability, the form should make that obvious and give them a separate place to sign. This helps avoid later arguments that the person didn't realise what they were agreeing to.

You should also think commercially. Some large customers won't accept personal guarantees. For smaller or newer customers, you might approve a lower credit limit, require upfront payment until trading history is established, or ask for a guarantee before extending larger credit.

Should You Register A Security Interest On The PPSR?

You should consider a PPSR registration if your terms give you a security interest, especially if you supply goods on credit and use retention of title wording. The Personal Property Securities Register is New Zealand's official register for security interests in personal property.

A retention of title clause says you keep ownership of goods until you're paid. But on its own, that clause may not give you the protection you expect if the customer becomes insolvent or other creditors are involved. To strengthen your position, you often need properly drafted PPSR clauses and a registration on the PPSR.

This is common for suppliers who provide:

• stock or inventory on credit
• equipment or machinery
• materials that may be installed, used or resold
• goods under ongoing supply arrangements

Timing matters. For some inventory security interests, you generally need to register before the customer gets possession if you want the strongest priority position. If you register late, your security interest may rank behind someone else or may not protect you as well as you thought.

A basic PPSR process usually looks like this:

1. Include clear security interest and retention of title wording in your terms.
2. Get the customer to accept those terms before you supply on credit.
3. Register a financing statement on the PPSR against the correct legal customer.
4. Use the right collateral description and registration details.
5. Monitor expiry dates and renew registrations before they lapse.

PPSR registrations are technical, so it's worth getting tailored advice if you're relying on them for meaningful credit exposure. A small error in the customer's legal name, NZBN or company number can cause real problems later.

How Do Interest, Recovery Costs And Privacy Notices Work?

You can usually include interest, recovery costs and privacy notices in your credit application terms, but they need to be drafted clearly and fairly. These clauses work best when the customer sees and accepts them before the account is opened.

Interest On Overdue Invoices

If you want to charge interest, say exactly when it starts and how it's calculated. For example, your terms might say interest applies to overdue amounts at 1.5% per month, calculated daily, from the due date until payment.

Here's how that could work. If Morning Lane Coffee owes Jess $8,000 and pays 40 days late, and the agreed interest rate is 1.5% per month, the interest for that period would be roughly $160. The exact amount depends on the calculation method in the terms.

Be careful with very high rates. If a charge looks punitive rather than a genuine commercial protection, it may be challenged. Your terms also need to fit with the Fair Trading Act 1986, especially if any part of your dealing could be misleading or unfair in context.

Recovery Costs

Your terms can say the customer must pay reasonable costs you incur because they haven't paid on time, such as collection agency fees or legal costs. The key word is reasonable. A clause that lets you add vague or excessive fees may be harder to rely on.

Without a written costs clause, you may struggle to recover anything beyond the invoice amount and agreed interest. With a clear clause, you're in a better position to say the customer accepted those consequences from the start.

Privacy Notices

If your form collects personal information about directors, sole traders, guarantors or trade referees, you need to think about the Privacy Act 2020 and your privacy policy. Your privacy notice should explain what you collect, why you collect it, who you may disclose it to and how people can access or correct their information.

If you carry out credit checks or use credit reporting information, the Credit Reporting Privacy Code and any credit reporting policy also matter. You should get clear consent before checking someone's credit or sharing information with credit reporters where that applies.

At a minimum, your privacy wording should cover credit assessment, account management, identity checks, trade references, PPSR registrations, overdue account management and any disclosures to service providers who help you run the account.

Credit Application Form Template: What Should It Include?

A credit application template should include the sections below, but your credit application and terms of trade still need to be tailored before you use them. Your industry, customer type, credit limits and PPSR needs can change the wording quite a lot.

1. Customer Details: Record the full legal name, trading name, NZBN, Companies Office number, addresses and contact details.
2. Business Structure: Ask whether the customer is a company, sole trader, partnership, trust or other organisation.
3. Accounts Contacts: List the people who receive invoices, approve payments and handle account questions.
4. Credit Requested: State the monthly credit limit requested and your right to approve a lower limit.
5. Trade References: Ask for current suppliers who can confirm payment history.
6. Authority To Check Information: Get consent to verify details, contact referees and carry out appropriate credit checks.
7. Terms Of Trade Acceptance: Include the payment terms, order rules, delivery terms, returns, interest and recovery costs, or attach your terms of sale clearly.
8. PPSR And Retention Of Title: Set out any security interest, retention of title wording and customer obligations to help with registration.
9. Personal Guarantee: Include a separate guarantee section with separate signatures if individuals are guaranteeing the account.
10. Privacy Notice: Explain how personal information will be collected, used, stored and disclosed.
11. Signatures: Get signatures from authorised customer representatives and any guarantors, with names, roles and dates.

Before you approve the account, it's also worth using a short internal checklist:

• Have you confirmed the customer's legal identity?
• Does the person signing have authority?
• Have you set a credit limit you can live with?
• Have all guarantors signed in the right place?
• Do you need a PPSR registration before supplying?
• Have you saved the signed documents somewhere easy to find?

This doesn't have to be complicated. The aim is to make your approval process consistent, so your team doesn't accidentally offer generous credit on loose paperwork.

Key Takeaways

• A credit application form helps you assess customers before you offer a trade account.
• Your credit paperwork should connect clearly to your terms of trade, not sit separately as a simple admin form.
• Personal guarantees can give extra protection, but they need clear wording and separate signatures.
• If you rely on retention of title or other security, PPSR registration may be essential to protect your position.
• Interest, recovery costs and privacy notices should be clearly accepted before you supply on credit.
• A template can help you start, but your document should be tailored to your customers, credit risk and industry.

If you'd like help with your credit application documents, terms of trade, personal guarantee wording or PPSR and privacy clauses, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.