Company Credit Check: How to Vet a Customer or Supplier Before Terms
Run a company credit check before giving a customer trade terms: free ASIC and ABN searches, reading the report, warning signs and PPSR protection.
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Company Credit Check · Trade Terms · PPSR
Trade terms are a loan you make to your customer. What to check on a company and its directors before you extend credit, how to read a commercial credit report, and how to protect your terms after the check.
Quick Answer
You can run a company credit check on another business before you give it trade terms, starting with free public searches on its ABN, its company record and its directors, then a paid commercial report if the amount at risk justifies it. A business credit report on the company needs no consent, but a sole trader's or a guaranteeing director's personal file does. After the check, set terms to match what you found and register your retention of title on the PPSR before goods leave.
Also called: business credit check on a customer, trade credit check, commercial credit check. They describe the same check; "trade credit check" is the wording suppliers and creditors tend to use.
Can you run a credit check on another company before giving it credit?
You can run a credit check on another company before you give it credit, because a company is a separate legal entity and its registration record, its ABN and any commercial credit file held on it can be searched without asking it first. That is the easy part.
The line moves when the check reaches a person. The Office of the Australian Information Commissioner (OAIC) explains that a credit provider can access an individual's consumer credit report to assess an application for commercial credit, or to assess them as a guarantor, but only where that person has consented. A sole trader customer is a person. So is the director who signs a guarantee on a company account. Check the entity before the person, and get consent for the person, not the company.
The business credit report guide covers what a business credit file holds and how it differs from a personal file. This insight is the other side of that guide: you are the one reading someone else's file, and deciding how much credit to give.
Which public searches should you run before you pay for a report?
Run the free public searches first, because they confirm who you are dealing with before you spend money on a commercial report. ASIC's guidance on checking whether another business is trustworthy lists the registers to use, and most of them cost nothing.
- ABN Lookup. Free access to public ABN information: whether the ABN is active or cancelled, the entity type and whether it is registered for GST. Match the entity type to what the customer told you.
- ASIC companies register. Confirms the company exists, its ACN, any former names and whether it is under external administration. A full company extract listing the directors is a paid product.
- ASIC business names register. Shows who holds the trading name on the invoice, which may not be the company you are contracting with.
- ASIC banned and disqualified register. Shows whether a person is banned or disqualified from managing a company. Run each director's name.
- PPSR organisation search. A PPSR check shows security interests already registered against the customer, such as another supplier's retention of title or a financier's interest over equipment.
| Check | Where to run it | Free or paid (indicative) | What it tells you |
|---|---|---|---|
| ABN status | ABN Lookup | Free | Active or cancelled, entity type, GST registration |
| Company record | ASIC companies register | Basic search free; a company extract with directors is typically paid | Whether the company exists, its ACN, former names, external administration |
| Trading name | ASIC business names register | Free | Which entity holds the name on the invoice |
| Directors | ASIC banned and disqualified register | Free | Whether a director is banned or disqualified from managing a company |
| Security interests | PPSR organisation search | Typically a small fee per search | Who else already holds a registered interest over the customer's assets |
| Credit history | Commercial credit report from a credit reporting body | Paid; pricing varies by provider | Enquiries, defaults, court actions and, where reported, payment behaviour |
Sources: ASIC, Check another business is trustworthy, last updated 2 October 2026. ABN Lookup (Australian Business Register), no date shown. PPSR, Retention of title arrangements and the PPSR, no date shown. All read 9 October 2026.
In practice, these searches take less time than reading the customer's credit application, and they catch the mismatches a report won't flag on its own: a trading name held by a different entity, a cancelled ABN, a company already in administration. ASIC runs the companies and business names registers; the business credit report guide explains how ASIC and PPSR searches differ from what a credit reporting body records.
What does a commercial credit report on a customer actually tell you?
A commercial credit report tells you how the customer has behaved with credit before: who it has applied to, whether it has defaulted, whether creditors have taken it to court and, in some cases, how promptly it pays. Read it from the creditor's seat, one section at a time, and check every section against what the customer told you.
- Identity. Name, ACN, ABN and former names should match the application and your free searches. A mismatch is the first question to ask, not an automatic reason to refuse.
- Directors and related companies. Who runs the company now and, where the report shows it, the other companies its directors are linked to. Checking a director's own consumer file is a separate step that needs their consent.
- Enquiries. Recent applications for commercial credit. A cluster of recent enquiries can mean the customer is expanding, or that it is being turned down elsewhere. Treat it as a reason to ask, not a verdict.
- Defaults and payment behaviour. Overdue debts other creditors have listed, and whether they were later paid. Where suppliers contribute payment data, the report can show how far past terms the customer tends to pay.
- Court actions and judgments. Claims creditors have brought, and whether they were settled or are still open.
- Business tax debt. The ATO can disclose a business tax debt above a set amount that has been overdue for a set period to credit reporting bodies. If the report carries one, the insight on business tax debt disclosure on a credit file explains what it signals.
What won't a credit report show you about a customer?
A credit report won't show you what is happening in the customer's business right now. A credit report is a snapshot, not a promise. It reflects what creditors and public sources have reported, which can lag, and many small suppliers never report at all. It says nothing about the customer's cash position, an order book about to dry up, or the supplier who was paid late last week. Treat it as one input beside your own searches, trade references and the terms you set.
Which warning signs should change the terms you offer?
The warning signs that should change your terms are recent defaults, court actions, a disclosed business tax debt, a director with a banned or disqualified record, and a burst of recent credit enquiries. None of them means you must refuse the account. They mean you offer less credit, shorter terms or more security until the customer has a payment record with you.
Green flags on a customer's report
- Name, ACN and ABN match the application
- A settled company history under the same directors
- No defaults or court actions, or old ones marked paid
- Enquiries spread over time, not bunched together
- Trade references who confirm payment on terms
Red flags on a customer's report
- A name change, ABN or trading name you can't reconcile
- Recent unpaid defaults or an open judgment
- A disclosed business tax debt
- A director on the banned and disqualified register
- A new company run by directors whose earlier companies you can't account for
On that last point, check the directors' history and stop there. Ask the customer about it directly, and set terms on what you can verify. The same goes for a tax debt flag: the tax debt disclosure insight covers what a lender or supplier can and cannot read into it.
Where this commonly lands is a middle path rather than a yes or a no: a smaller starting limit, cash on delivery for the first few orders, or a guarantee, reviewed once the account has run on time for a few months.
How do you protect yourself after the check?
You protect yourself after the check by matching your terms to the risk you found and securing your right to the goods: a deposit, shorter terms, a set credit limit, a director's guarantee, and retention of title registered on the PPSR.
- A deposit or part payment. Reduces your exposure on the first orders, when you know least about how the customer pays.
- Shorter terms to start. Extend them once the account pays on time, not before.
- A credit limit. A hard ceiling on what the customer can owe you at any one time, written into the account and enforced when orders come in.
- A director's guarantee. Makes the director personally liable if the company does not pay. It must be signed by the director personally, and their consent to a credit check can sit in the same document.
- Retention of title. Your terms say you own the goods until they are paid for, which only protects you if it is registered.
Why does retention of title only protect you if it is registered?
Retention of title only protects you if it is registered because the PPSR treats an unregistered interest as if it does not exist against other creditors. PPSR guidance on retention of title warns that an unregistered retention of title interest leaves you as an unsecured creditor. ASIC's guidance for businesses supplying goods on credit says to register early. Register before you deliver. The timing rules for registering on the PPSR are strict, so set the registration up when the account opens, not when a payment is late.
What should your credit application form ask for?
Your credit application form should ask for everything you need to run the checks above and to enforce your terms later: the entity details, the directors, trade references, consent, a guarantee and your terms of trade with a retention of title clause.
- The entity. Full legal name, ABN and ACN, and the trading name that will appear on orders.
- The directors. Each director's full name and date of birth, so the banned and disqualified search and any consented check match the right person.
- Trade references. Current suppliers who give the customer terms. Call them; a reference nobody rings is decoration.
- Consent. Signed consent from each individual you will check: sole trader customers, partners and directors who guarantee. Consent for the person, not the company.
- A guarantee. A director's guarantee signed personally, not on behalf of the company.
- Your terms of trade. Payment terms, what happens to overdue amounts, and a retention of title clause.
Have your solicitor draft or review the form once, then use it for every new account. How far your terms, your retention of title clause and a customer's guarantee will hold up is a legal question, not a credit one.
How does giving trade credit change your own cash flow and finance?
Giving trade credit changes your own finance because every invoice on terms is cash you have funded and not yet collected. Trade terms are a loan you make to your customer, and your own lender reads your debtor book much the way you just read your customer's report.
Slow payers stretch your working capital. A debtor book leaning on one or two large customers reads as concentration risk when you apply for finance, which the insight on revenue concentration risk in business loan applications walks through. If terms are tying up cash, invoice finance advances against unpaid invoices, and the funder looks at the quality of your debtors too. In practice, the checks that protect your trade terms are the same ones a funder runs over your debtor ledger.
If you are on the other side, and a supplier has cut your terms back to cash on delivery, the guide on what to do when a supplier cuts your credit covers it. If trade credit is squeezing the business, compare your options for business loans or start at the Business Owners Hub.
A company credit check before trade terms starts with the free registers (ABN Lookup, the ASIC companies, business names and banned and disqualified registers, and the PPSR), adds a commercial credit report when the amount at risk justifies it, and treats any individual's file as consent-only. Read the report against the application, adjust your terms for what you find, and secure the goods with a registered retention of title.
Key takeaway: check the entity before the person, set terms to match what you find, and register before you deliver.Frequently Asked Questions
You can do a credit check on a company, because a company is a separate legal entity and its public records and commercial credit file can be searched without asking it first. Start with free searches on its ABN, the ASIC companies register and the banned and disqualified register, then buy a commercial report if the amount at risk justifies it. Checking a director's or a sole trader's personal file is different, and needs that person's consent.
It is normal for a company to do a credit check before giving another business trade terms, and many suppliers make it a standard step in opening an account. The check usually covers the business's registration, its credit history and, with consent, the directors who guarantee the account. If a supplier has already cut your own terms back, the guide on a supplier cutting your credit to COD explains what usually triggers it.
A company running a credit check looks for confirmation of who it is dealing with and evidence of how that business has handled credit before. That typically means an identity match on name, ABN and ACN, recent defaults, court actions, a disclosed business tax debt and a pattern of recent credit enquiries, the entries a business credit report carries. Lenders run a similar set of public searches, covered in what lenders look up on a self-employed borrower.
You need permission to credit check a sole trader customer, because a sole trader is a person and their credit information sits on their personal file. A credit provider can access a consumer credit report to assess commercial credit, or to assess a guarantor, only with that person's consent, so put a signed consent clause in your credit application. The same applies to a director who signs a guarantee, which the director's guarantee guide explains.
You should register on the PPSR if you sell goods on credit under a retention of title clause, because an unregistered interest leaves you an unsecured creditor if the customer fails. Register when the account opens, before you deliver, because timing affects whether your interest ranks ahead of others. The PPSR glossary entry covers how registrations and searches work.
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