New Customer Due Diligence Checklist
A few minutes of checking before you grant credit prevents most of the bad debts you'll ever chase.
What's included
- What to verify about a new customer's legal identity
- How to confirm who is authorised to incur the debt
- What checks suit the size of the credit requested
- How to set sensible terms and an initial limit
- How to record the decision for later review
6 min read
Why due diligence pays
Prevention is the cheapest collections strategy there is, and it starts before the first invoice. A short due-diligence routine confirms who you are really dealing with, whether they can be expected to pay, and on what terms — so credit is granted on evidence rather than optimism. The checks barely slow a genuine customer while screening out the accounts that cause most write-offs. This checklist covers commercial accounts across QLD, VIC, NSW and the ACT; adapt the depth to the credit at stake.
The due diligence checklist
- Legal entity — capture the exact legal name and whether it is a company, trust, partnership or sole trader.
- ABN/ACN — verify the ABN/ACN and that it is active and matches the entity.
- Authority — confirm who is authorised to place orders and incur the debt.
- Contact details — capture billing contact, address, email and phone.
- Trade references — for larger limits, obtain and check two trade references.
- Credit check — for higher limits, obtain a credit report.
- Terms and limit — set written terms and a conservative initial limit.
- Guarantee/security — for higher risk, consider a personal guarantee.
How to use it
Build this into onboarding so checking is routine, not a special imposition — and notice the customer who resists basic verification, because reluctance early often predicts trouble later. Scale the effort to the request: an ABN check and contact details may suffice for a small account, while a real exposure warrants references and a credit report. Capture the exact legal entity and who is authorised to incur the debt — getting the right party on record now is what makes any later recovery straightforward. Feed the result into your credit approval policy, and keep a referral path ready through refer a debt.
Keep the record
The point of due diligence is not just the decision but the evidence behind it. Store the verified entity, the checks done, the terms set and the limit granted together, so a later review — or a recovery — starts from a complete file rather than a vague memory. When you revisit limits, this record shows what the account looked like at the start and how far its behaviour has moved from that baseline. A tidy onboarding record is the cheapest insurance in your whole credit process.
Tips
- Prevention starts before the first invoice is issued.
- Get the exact legal entity and authorised party on record.
- Scale checks to the credit at stake, not every account.
- Keep the verified file for later review and recovery.
FAQ
Is checking a new customer worth the friction?
Yes — a few minutes up front prevents the majority of the bad debts you would otherwise spend weeks chasing.
What's the single most important check?
Getting the exact legal entity and authorised party right — recovery is far harder if you billed the wrong party.
Do small accounts need full due diligence?
No — scale it. An ABN check and contact details are often enough for a modest limit.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.