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If your business provides credit to customers, you may wish to obtain a Credit Application Terms document. In 2025, having clearly defined and up-to-date terms is more important than ever as digital payment methods and online credit management continue to evolve.
This document is a contract that sets out the roles and responsibilities of each party, including expected timeframes and the procedures to follow if a customer fails to make repayments. It forms part of your overall risk management strategy and works well alongside other essential contracts, such as a Service Agreement or even guidance from our What Is a Contract? resource.
What Are Credit Application Terms?
Credit Application Terms record the specific conditions under which you will extend credit to your customers. In today’s market, these terms not only cover traditional credit arrangements-such as a customer paying after purchase or on a payment plan-but also address digital invoicing and online payment options that are increasingly common in 2025.
The document details your credit arrangements, including clauses that specify when payments fall due, the interest payable on overdue amounts, and the actions you may take if further steps are required to recover outstanding payments.
This legally binding contract between you and your customer ensures that both parties have clarity on their obligations, reducing the likelihood of disputes.
Why Do I Need Credit Application Terms?
If a customer defaults or disputes the amount owed, having robust Credit Application Terms to refer back to is essential. With both parties agreeing to and signing this agreement, it helps to resolve disagreements and misunderstandings regarding payment obligations.
When your terms are current and comprehensive, they can assist in:
- Setting clear rules. Your Credit Application Terms establish a definitive payment schedule, interest rates on late payments, and the circumstances under which you can take further action for non-payment.
- Explaining the consequences of default. Should a customer default on repayments or refuse to pay, your documented terms provide a clear framework for the recovery process.
- Limiting your liability. Including appropriate disclaimers and defined clauses helps protect your interests and minimises potential liabilities in the event of disputes.
What is Included in Credit Application Terms?
Generally, Credit Application Terms address the following matters:
- Payment schedule
- Interest rate details
- Consequences of default
- Rights in the event of business liquidation
- Liability protection provisions
These terms need to be reviewed regularly to ensure they remain compliant with evolving legislation, including updates to the legal requirements for starting a business in Australia and changes to the Australian Consumer Law.
Further Considerations in 2025
It is important to review and update your Credit Application Terms at least annually or whenever there are significant changes in your business model or relevant legislation. In 2025, with the rise of digital invoicing and online payment portals, these terms should integrate seamlessly with your existing online shop terms and conditions and billing systems. For further guidance on protecting your business, our article on What Makes a Contract Legally Binding offers useful insights to ensure your arrangements meet current industry standards.
Need Help?
Having an experienced lawyer draft your Credit Application Terms will ensure that you have a clear and robust document, setting out your credit conditions and outlining the steps to take in the event of a dispute. It also helps align your agreement with your overall business structure-consider reading our guide on Registering Your Business to understand the broader legal landscape.
Feel free to get in touch with us to get things started on your Credit Application Terms! Our friendly team can be reached at 1800 730 617 or at team@sprintlaw.com.au. Whether you’re a sole trader or running a larger organisation, we’re here to help you navigate the complexities of modern business credit arrangements.
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