How Often Should You Ask Customers to Update Their Credit Application


Empower your entire organization to do their best credit decisions

Credit Applications Minimize Financial Risk

One of the main goals of a credit application is to establish a relationship with a new customer and learn as much about the prospective client before entering a business and financial relationship. 

But the end game is really to prevent delinquent payments, bad debt and financial loss. So that means not only requiring a credit application when a company signs on as a new customer, but also periodically checking their credit and updating the information you have on them to ensure their creditworthiness.

Simply put, an accurate and completed up-to-date credit application is one of the best ways to minimize risk. A new application should be signed annually. Using a digital credit application service like Nectarine Credit will allow you to easily request new applications.

Events That Could Change Creditworthiness of A Company

In addition to periodic checks, there are also a handful of events in a business lifecycle that could trigger a significant change in a company’s creditworthiness -- or at least require you to have them fill out another credit application or monitor their credit more closely.

  • An outside or macro-economic event could trigger a financial change to a business. Let’s face it, when the Covid-19 pandemic hit in February and March of 2020, most companies’ cash positions dropped significantly, and most companies had a less rosey financial outlook.
  • One of your clients could be involved in a lawsuit or a legal judgment, or even a lien, that has enough material impact that might change your client’s financial situation.
  • A significant regulatory change, such as higher tariffs or increased government scrutiny, in your specific industry might trigger a change.
  • A significant financial change at a company will more than likely reveal itself in an updated credit application’s vendor and bank references.
  • Likely to be less serious issues, but still worth running another credit application or check on your client include: change of address, ownership, or change of corporate structure.
  • Finally, if a current customer, who’s previously filled out a credit application, requests a higher credit limit, it’s important to check their creditworthiness again.

Credit Monitoring

Nectarine Credit offers credit application management software for both buyers and sellers. It's free to get started. In addition to the actual credit application -- and offering the ability to have customers sign a new application -- Nectarine Credit users can monitor their customers for changes in vendor payments. An updated application will give you insight into more recent bank balances and cash flow.

While having your customer fill out an application when a significant event hits, monitoring is more timely and in many ways more relevant. A signed follow-up application can come after you've noticed a change in vendor payments or bank balances.

If you'd like to see a demo of Nectarine Credit's platform, contact us here.