{"id":30894,"date":"2025-06-03T08:51:32","date_gmt":"2025-06-03T12:51:32","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=30894"},"modified":"2025-06-03T08:51:34","modified_gmt":"2025-06-03T12:51:34","slug":"a-guide-to-business-credit-applications-for-ar-teams","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/a-guide-to-business-credit-applications-for-ar-teams\/","title":{"rendered":"A guide to business credit applications for AR teams"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tA guide to business credit applications for AR teams\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-06-03T08:51:32-04:00\">June 3, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"A guide to business credit applications for AR teams\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/a-guide-to-business-credit-applications-for-ar-teams\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/elizabethryan\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2024\/08\/lizryan-350x350.png\" class=\"entry-author__image\" alt=\"Elizabeth Ryan\" \/>\t\t\t\t<span class=\"entry-author__name\">Elizabeth Ryan<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Business credit applications are a critical part of credit risk management. When used properly, they help assess the financial health of potential customers and identify any red flags before extending credit. However, many businesses either skip this step entirely or fail to follow up after collecting the information.<\/p>\n\n\n\n<p>In this guide, you\u2019ll learn what to include in a business credit application, best practices for reviewing them, and how automating the process with tools like <a href=\"https:\/\/www.sage.com\/en-us\/products\/sage-ar-automation\/\"><strong>Sage AR Automation<\/strong> <\/a>can help protect your business.<\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-what-to-include-in-a-business-credit-application\" data-level=\"2\">What to include in a business credit application<\/a><\/li><li><a href=\"#h-evaluating-financial-health\" data-level=\"2\">Evaluating financial health<\/a><ul><li><a href=\"#h-profitability\" data-level=\"3\">Profitability<\/a><\/li><li><a href=\"#h-financial-ratios\" data-level=\"3\">Financial ratios<\/a><\/li><li><a href=\"#h-cash-flow\" data-level=\"3\">Cash flow<\/a><\/li><li><a href=\"#h-debt-levels\" data-level=\"3\">Debt levels<\/a><\/li><li><a href=\"#h-industry-comparison\" data-level=\"3\">Industry comparison<\/a><\/li><\/ul><\/li><li><a href=\"#h-business-credit-application-best-practices\" data-level=\"2\">Business credit application best practices<\/a><ul><li><a href=\"#h-questions-to-ask-trade-references\" data-level=\"3\">Questions to ask trade references:<\/a><\/li><li><a href=\"#h-questions-to-ask-the-customer-directly\" data-level=\"3\">Questions to ask the customer directly:<\/a><\/li><\/ul><\/li><li><a href=\"#h-managing-customer-credit-applications\" data-level=\"2\">Managing customer credit applications<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-to-include-in-a-business-credit-application\"><strong>What to include in a business credit application<\/strong><\/h2>\n\n\n\n<p>A business credit application can be as simple or detailed as you need. At a minimum, request the following information:<\/p>\n\n\n\n<p>\u2022 Business name, address, phone number, and fax<\/p>\n\n\n\n<p>\u2022 Names, addresses, and Social Security numbers of the business owners or principals<\/p>\n\n\n\n<p>\u2022 Business type (e.g., corporation, partnership, sole proprietorship)<\/p>\n\n\n\n<p>\u2022 Industry<\/p>\n\n\n\n<p>\u2022 Number of employees<\/p>\n\n\n\n<p>\u2022 Bank and trade references<\/p>\n\n\n\n<p>\u2022 Bankruptcy history<\/p>\n\n\n\n<p>\u2022 Alternate business names<\/p>\n\n\n\n<p>For a more complete assessment, consider requesting financial documents that allow you to evaluate key indicators such as profitability, liquidity, and debt levels.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-evaluating-financial-health\"><strong>Evaluating financial health<\/strong><\/h2>\n\n\n\n<p>When analyzing a customer\u2019s financial information, here are some critical areas to focus on:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-profitability\"><strong>Profitability<\/strong><\/h3>\n\n\n\n<p>Are revenues exceeding expenses? This helps determine if the business is financially stable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-financial-ratios\"><strong>Financial ratios<\/strong><\/h3>\n\n\n\n<p>Use ratios to assess liquidity and solvency:<\/p>\n\n\n\n<p>\u2022 Debt-to-equity ratio<\/p>\n\n\n\n<p>\u2022 Debt-to-asset ratio<\/p>\n\n\n\n<p>\u2022 Current ratio<\/p>\n\n\n\n<p>\u2022 Quick ratio<\/p>\n\n\n\n<p>\u2022 Operating cash flow ratio<\/p>\n\n\n\n<p>\u2022 Working capital ratio<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-cash-flow\"><strong>Cash flow<\/strong><\/h3>\n\n\n\n<p>Look at cash flow from operations, investments, and financing. A positive <a href=\"https:\/\/www.sage.com\/en-us\/blog\/why-you-should-be-doing-cash-flow-analysis\/\">cash flow <\/a>indicates a lower risk to your receivables.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-debt-levels\"><strong>Debt levels<\/strong><\/h3>\n\n\n\n<p>Review outstanding liabilities to understand how much additional debt the customer can reasonably manage.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-industry-comparison\"><strong>Industry comparison<\/strong><\/h3>\n\n\n\n<p>Benchmark the customer\u2019s financials against industry standards to evaluate how they measure up.<\/p>\n\n\n\n<p>If you don\u2019t want to request financial documents, consider purchasing a commercial credit report, though this can become costly over time. Even for existing customers, a new credit application is a good idea if it has been a while or if they request a credit limit increase.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-business-credit-application-best-practices\"><strong>Business credit application best practices<\/strong><\/h2>\n\n\n\n<p>Sending and collecting the application is just the first step. It\u2019s crucial to follow up with trade references and clarify anything unclear in the application. Here are a few suggestions:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-questions-to-ask-trade-references\"><strong>Questions to ask trade references:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Do they pay all vendors consistently, or are some paid late?<br><\/li>\n\n\n\n<li>Are there signs of seasonal payment patterns?<br><\/li>\n\n\n\n<li>Have there been any bounced checks?<br><\/li>\n\n\n\n<li>Are their orders and payments consistent?<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-questions-to-ask-the-customer-directly\"><strong>Questions to ask the customer directly:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Are there one-time issues that explain poor payment history?<br><\/li>\n\n\n\n<li>Would they be willing to pay via COD until credit is approved?<br><\/li>\n\n\n\n<li>How long have they been in business, and what\u2019s their customer base like?<br><\/li>\n\n\n\n<li>Do they have their own credit policies in place?<br><\/li>\n\n\n\n<li>Are there any suits, liens, bankruptcies, or judgments filed?<br><\/li>\n<\/ul>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Sage Intacct Accounts Payable Automation<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p class=\"\">Download this datasheet to learn how Sage Intacct can save you hundreds of hours and shave days from your AP cycle with AP automation software.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"##gate-d01f3f37-275f-473b-9736-41a025d18f72\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1214\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1185859128-1214x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1185859128-1214x810.jpg 1214w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-managing-customer-credit-applications\"><strong>Managing customer credit applications<\/strong><\/h2>\n\n\n\n<p>Managing credit applications manually can be time-consuming, especially when dealing with high volumes. A modern accounts receivable automation solution like <a href=\"https:\/\/www.sage.com\/en-us\/products\/sage-ar-automation\/\"><strong>Sage AR Automation<\/strong> <\/a>can help simplify this process with document management tools that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Save templates to reduce time spent recreating applications<br><\/li>\n\n\n\n<li>Send and receive credit applications through secure portals or encrypted email.<br><\/li>\n\n\n\n<li>Store completed forms and other documents like invoices, proof of delivery, or timesheets<br><\/li>\n\n\n\n<li>Trigger notifications when it\u2019s time to update a customer\u2019s credit application or run a new credit check<br><\/li>\n<\/ul>\n\n\n\n<p>With the right system in place, it\u2019s easier to stay organized and reduce risk\u2014while keeping your AR processes efficient and secure.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Business credit applications help assess customer risk and protect cash flow. This guide covers what to include, how to evaluate financial health, and ways to automate the process with Sage AR Automation.<\/p>\n","protected":false},"author":1806,"featured_media":24375,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[43],"tags":[],"business_type":[312],"lilypad":[],"context":[],"industry":[57],"persona":[150],"imagine_tag":[],"coauthors":[584],"class_list":["post-30894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","business_type-accountants","industry-financial-services"],"sage_meta":{"region":"en-us","author_name":"Elizabeth Ryan","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2024\/08\/BrandShootLDN_Jul2022_TechSoftware_0015-Final.jpeg","imagine_tags":[]},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/30894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/1806"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=30894"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/30894\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/24375"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=30894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=30894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=30894"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=30894"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=30894"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=30894"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=30894"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=30894"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=30894"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=30894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}