Checking a fleet customer before opening an account
How a dealership or workshop checks a fleet customer's creditworthiness, sets a starting limit, and puts the limit, terms and hold to work.
By Achekam · · 5 min read · For Automotive businesses in South Africa, Nigeria, Kenya
A logistics company with a fleet of delivery vans walks into the workshop and asks to open an account. Services, tyres, brake jobs, the occasional accident repair: steady work, every month, for years. The service manager is delighted. The person who keeps the books asks a quieter question: what happens if they stop paying after we have done three months of work?
Fleet accounts are among the most valuable customers a workshop or dealership can win, and among the most expensive to lose if they go bad. The workshop has already bought the parts and paid the technicians before the first invoice is even due. This article sets out how to check a fleet customer before the first job, and how to keep the account under control once it is open.
Why the check comes before the first job
ACCA identifies three key areas of managing accounts receivable: checking a customer's creditworthiness before granting credit, setting credit terms and monitoring receivables, and collecting cash from customers. The order matters. Once the work is done on credit, the only remaining tool is collection, and collection from a customer who cannot pay is slow and uncertain.
Investopedia describes credit control in the same spirit: deciding who qualifies for credit, assessing creditworthiness, and setting policies that balance sales growth with financial stability. A workshop that opens accounts on the strength of a handshake is choosing growth with no balance at all.
Where to look
ACCA lists ways to assess a customer's creditworthiness: bank references, trade references, credit rating or reference agencies, the customer's financial statements, financial media reports, and visits to the customer. For a fleet applicant, a practical pack looks like this:
- An application form with the registered company name and number, directors, physical address, and who is authorised to approve work and sign for vehicles.
- A bank reference, requested with the customer's written consent.
- Two or three trade references, ideally from suppliers that also extend credit on vehicles, such as a tyre supplier or a fuel card provider.
- A credit agency report from a bureau in your country.
- Recent financial statements, for larger fleets.
- A visit, to the depot where the vehicles are kept.
ACCA's article on accounts receivable management discusses each of these sources and how to weigh them.
What each source will and will not tell you
No single source settles the question, and ACCA is candid about their limits. A bank reference will stick to the facts and is rarely more than guarded. Financial statements may be out of date, or may have been manipulated. Trade references can be hand-picked by the applicant from the suppliers it pays first.
That is why the visit is worth the time. A depot with well-kept vehicles, a maintenance schedule on the wall and a fleet manager who knows the service history tells you more about how the business is run than a reference letter. A depot where vehicles are parked in the dust with flat tyres tells you something too.
Read the sources together. If the agency report shows recent judgments, the trade references are all very new suppliers, and the financial statements are two years old, the picture is consistent, and not in a good way.
Start low, and watch for the small-order trick
ACCA advises setting a credit limit for each new customer that grows only slowly as trust grows, with attempted breaches reported to the credit controller. It also warns of a common trick: a new customer places a small order and pays it promptly, then delays payment on a large one.
In a workshop the pattern is familiar. The first month is a few services, paid on the dot. The second month the customer books five vehicles in for major repairs and a set of tyres each. The invoice goes out, and the payment stops.
A sensible approach:
- Start with a limit that covers routine servicing, not major repairs.
- Require approval from the person who keeps the books before any single job above a set amount goes ahead on account.
- Review the limit after a few months of on-time payment, not after the first one.
- Treat a sudden jump in the size of jobs as a reason to look again, not a reason to celebrate.
Setting the limit, terms and hold in Achekam
Achekam's Wholesale add-on lets a business keep trade customers with credit limits, terms and a hold. Trade customers are created on the Wholesale screen, so the add-on is needed for this.
Where the workshop uses Achekam's till, a sale can be charged to a trade customer's account. Doing so writes a receivables invoice and checks the account's hold and credit limit. If either would be breached, the sale is stopped unless a supervisor or manager overrides it with a reason. That reason is the record ACCA's advice calls for: an attempted breach that someone had to justify.
Invoices raised outside the till work the usual way: a business creates customer invoices as drafts it can change or delete, and issuing one takes the next number in its sequence and posts it to the ledger as debtors, sales and output VAT. Default terms are 30 days; set the terms on the fleet account to whatever you agreed, and make sure the invoice says so.
Keeping the account healthy
The check at the start is only the first step. Each month, look at the fleet customer's balance against its limit and against its terms. Ask the fleet manager about any vehicle that has been in the workshop for a long time with a large repair pending; a customer that cannot authorise repairs may be a customer that cannot pay for them.
For trade counter accounts that work the same way, see selling on account at the trade counter, and for the policy that ties it together, read credit policy essentials.
A fleet account opened carefully is worth years of steady work. One opened in a hurry can cost more than the work was ever worth.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
