Payments
What checks should I run before extending trade credit in NZ?
Updated 2026-07
Confirm the exact legal entity applying for credit, then look at its current status and history before you open the account. Back the account with signed terms of trade, and if you retain title to goods until payment, register that interest on the PPSR, because unregistered interests often rank behind registered ones in an insolvency.
Key facts
- Terms of trade only protect you if they are signed before you supply.
- A retention of title clause that is not registered on the PPSR often ranks behind registered security in a liquidation.
- Personal guarantees from directors are common where a company has a short history.
- Status can change after you open the account, so monitoring matters as much as the first check.
Get the entity right on the application
The credit application should state the exact legal name and NZBN of the entity you will invoice, signed by a director. If you later need to enforce your terms, a mismatch between the name on the application and the entity you supplied is an expensive problem.
Check the company before the first invoice
Confirm the entity is registered and in good standing, and look at how long it has existed and whether directors have changed recently. A young entity or a fresh director change is not a reason to refuse credit, but it is a reason to size the limit accordingly.
A company check covers the entity, its status and its history in one pass, and gives you a record of what you checked and when.
Secure your position
Have terms of trade signed before goods move. Include a retention of title clause if you supply goods, and register that security interest on the Personal Property Securities Register. Registration is what gives the clause standing against other creditors if the customer fails.
For companies with little history, consider asking a director for a personal guarantee. Many will agree for a modest starting limit, and the conversation itself tells you something.
Set the limit and keep watching
Set an opening limit you could absorb as a loss, and define what pauses supply, such as an account going past 60 days. Review the limit on evidence of payment behaviour, not on the strength of the relationship.
The first check reflects one day. Put credit customers under monitoring so a change in status reaches you before the next order does.
Questions and answers
Do these checks apply to sole traders too?
The framing changes. A sole trader is personally liable, so there is no company status to check, but you should still verify identity, use signed terms and register any security interest on the PPSR.
What does it mean for my account if a customer goes into liquidation?
New supply on credit is generally unwise, and your existing debt becomes a claim in the liquidation. Unless you registered a security interest, that claim is usually unsecured.
Sources
- Companies Register (companiesoffice.govt.nz)
- Personal Property Securities Register (ppsr.govt.nz)
Check a company before you commit
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