Credit clause: Copy, customize, and use instantly
Introduction
A credit clause outlines the terms and conditions under which credit is provided to a party, either for the purchase of goods or services, or for other contractual obligations. This clause ensures that both parties understand the terms of credit, including the amount, payment terms, interest rates, and consequences for failure to meet obligations.
Below are templates for credit clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard credit clause
This version includes basic provisions for extending credit.
The [Buyer/Customer] is granted a credit limit of [Amount] for the purchase of goods/services under this Agreement. Payments for credit extended must be made within [X] days of the invoice date. Any overdue amounts will be subject to interest at a rate of [X]% per annum, compounded monthly.
Credit clause with provision for credit approval
This version applies to credit approval.
Credit will be extended to the [Buyer/Customer] upon approval of their creditworthiness. The [Seller] reserves the right to review and approve or deny any credit request based on the [Buyer/Customer]'s financial history, payment history, and other relevant factors.
Credit clause with provision for interest on overdue credit
This version applies to interest on overdue credit.
Any credit extended under this Agreement that remains unpaid after [X] days will accrue interest at the rate of [X]% per annum. Interest will be calculated on the overdue balance and compounded monthly until the full amount is paid.
Credit clause with provision for credit limit review
This version applies to a review of credit limits.
The [Seller] reserves the right to review and adjust the credit limit extended to the [Buyer/Customer] at any time during the term of this Agreement. Adjustments may be made based on the [Buyer/Customer]'s payment history, financial condition, and other relevant factors.
Credit clause with provision for payment terms and penalties
This version applies to payment terms and penalties.
The [Buyer/Customer] agrees to pay all credit amounts within [X] days of receipt of the invoice. If payment is not made within this period, a late fee of [X]% of the overdue amount will be assessed, and additional interest will accrue as specified in this Agreement.
Credit clause with provision for credit withdrawal
This version applies to withdrawal of credit.
The [Seller] reserves the right to withdraw or reduce the credit limit extended to the [Buyer/Customer] at any time if the [Seller] believes that the [Buyer/Customer]'s financial condition has deteriorated, or if the [Buyer/Customer] fails to meet the payment terms as specified in this Agreement.
Credit clause with provision for payment in installments
This version applies to payment in installments.
The [Buyer/Customer] agrees to pay the credit balance in equal installments of [Amount] per month, starting from the date of the invoice. If the [Buyer/Customer] defaults on any installment, the entire balance will become due immediately, and interest will be charged at the rate specified in this Agreement.
Credit clause with provision for security for credit
This version applies to security for credit.
The [Buyer/Customer] agrees to provide security in the form of [collateral type, e.g., property, bank guarantee] for the credit extended under this Agreement. If the [Buyer/Customer] fails to pay the credit amount, the [Seller] reserves the right to claim the security to satisfy the outstanding debt.
Credit clause with provision for credit for specific goods/services
This version applies to credit for specific goods/services.
Credit will be extended only for the purchase of specific goods/services listed in this Agreement. Any purchases outside of the specified goods/services will not be eligible for credit, and payment must be made in full at the time of purchase.
Credit clause with provision for credit limits based on purchase history
This version applies to credit limits based on purchase history.
The [Buyer/Customer]'s credit limit will be determined based on their purchase history and timely payment of previous invoices. A higher credit limit may be granted as a reward for consistent payment history, and any request for credit increase will be evaluated based on this history.
Credit clause with provision for credit account maintenance fees
This version applies to maintenance fees.
A maintenance fee of [X] per month will be charged to the [Buyer/Customer]'s credit account. This fee covers the administrative costs of maintaining the credit account and is due monthly along with any outstanding credit balance.
Credit clause with provision for no-credit policy for high-risk customers
This version applies to a no-credit policy for high-risk customers.
The [Seller] reserves the right to refuse to extend credit to customers identified as high-risk based on their credit assessment. In such cases, payment must be made in full at the time of order placement, and no credit will be provided under this Agreement.
Credit clause with provision for automatic credit limit increase
This version applies to automatic credit limit increase.
The [Buyer/Customer]'s credit limit will be automatically increased by [X]% after [Y] months of timely payments and maintaining a good credit standing with the [Seller]. The [Buyer/Customer] will be notified of the increase in writing before it takes effect.
Credit clause with provision for early payment discount
This version applies to an early payment discount.
The [Buyer/Customer] may receive a [X]% discount on the total credit amount if payment is made in full within [X] days of the invoice date. This discount will be applied to the outstanding balance before calculating any interest or penalties.
Credit clause with provision for credit for services rendered
This version applies to services rendered.
The [Seller] agrees to extend credit for services rendered under this Agreement. The credit will cover the cost of services provided, and payment must be made within [X] days of the invoice date. Any late payments will incur interest as described in this Agreement.
Credit clause with provision for payment dispute
This version applies to payment dispute.
If the [Buyer/Customer] disputes any portion of the credit or invoice, they must notify the [Seller] in writing within [X] days of receiving the invoice. Disputed amounts will not accrue interest until the dispute is resolved, and the non-disputed amounts must still be paid according to the agreed payment terms.
Credit clause with provision for minimum payment
This version applies to minimum payment.
The [Buyer/Customer] agrees to make a minimum payment of [X] per month toward the outstanding credit balance. If the minimum payment is not made, the full remaining balance will become due immediately, and interest will accrue at the rate specified in this Agreement.
Credit clause with provision for credit reconciliation
This version applies to credit reconciliation.
At the end of each quarter, the parties agree to reconcile the credit account to ensure that all payments, interest charges, and fees have been correctly applied. Any discrepancies will be addressed promptly, and the [Buyer/Customer] will be notified of the final account balance.
Credit clause with provision for breach of credit terms
This version applies to breach of credit terms.
In the event that the [Buyer/Customer] breaches any of the credit terms outlined in this Agreement, including late payments or failure to provide security, the [Seller] reserves the right to terminate the credit arrangement, demand immediate payment, and apply penalties as specified in this Agreement.
Credit clause with provision for credit review and adjustment
This version applies to credit review and adjustment.
The [Seller] reserves the right to review and adjust the credit limit extended to the [Buyer/Customer] at regular intervals. Adjustments to the credit limit may be made based on the [Buyer/Customer]'s financial performance, payment history, and overall business relationship.
Credit clause with provision for credit upon receipt of goods
This version applies to credit upon receipt of goods.
The [Buyer/Customer] will be granted credit for the purchase of goods upon receipt, subject to confirmation of the goods' condition and quantity. Any discrepancies or issues must be reported within [X] days, or the credit will be considered final.
Credit clause with provision for security deposit
This version applies to a security deposit.
In addition to the credit extended, the [Buyer/Customer] agrees to pay a refundable security deposit of [Amount] to cover potential damage or non-payment. The deposit will be refunded upon the completion of the Agreement, subject to deductions for any outstanding balances or damages.
Credit clause with provision for gradual increase of credit limit
This version applies to gradual increase of credit.
The [Seller] agrees to gradually increase the [Buyer/Customer]'s credit limit based on their payment history. After each [X] months of timely payments, the credit limit will be reviewed and may be increased by [Y]% of the original limit.
Credit clause with provision for failure to pay and collection fees
This version applies to failure to pay and collection fees.
If the [Buyer/Customer] fails to make payment within [X] days of the due date, the [Seller] reserves the right to initiate collection proceedings. Any fees incurred during the collection process, including legal fees, will be added to the outstanding balance.
Credit clause with provision for transfer of credit balance
This version applies to transfer of credit balance.
The [Buyer/Customer] may request the transfer of their existing credit balance to another account, subject to the approval of the [Seller]. The transfer will be processed within [X] days and will be subject to any applicable fees as outlined in this Agreement.
Credit clause with provision for chargeback protection
This version applies to chargeback protection.
In the event of a chargeback, the [Buyer/Customer] agrees to provide proof of payment and a valid reason for initiating the chargeback. If the chargeback is deemed unjustified, the credit extended may be revoked, and the outstanding balance will become due immediately.
Credit clause with provision for early settlement discount
This version applies to an early settlement discount.
The [Buyer/Customer] will receive a discount of [X]% on the total credit amount if payment is made in full within [X] days of the invoice date. The discount will be applied to the outstanding balance before calculating any interest or late fees.
Credit clause with provision for partial credit application
This version applies to partial credit application.
In cases where a partial payment is made, the amount paid will first be applied to any outstanding interest or late fees. The remaining balance will be applied toward the principal credit amount, and the [Buyer/Customer] will be notified of the new balance due.
Credit clause with provision for cancellation of credit
This version applies to cancellation of credit.
The [Seller] reserves the right to cancel any credit arrangement if the [Buyer/Customer] is found to be in breach of the payment terms, fails to provide necessary documentation, or becomes financially unstable. In the event of cancellation, the full outstanding balance will become due immediately.
Credit clause with provision for minimum payment
This version applies to minimum payment.
The [Buyer/Customer] agrees to make a minimum monthly payment of [X] toward the outstanding credit balance. If the minimum payment is not made within the specified time frame, the full outstanding balance will become due, and interest will accrue at the rate specified in this Agreement.
Credit clause with provision for notification of overdue payments
This version applies to notification of overdue payments.
The [Seller] will notify the [Buyer/Customer] in writing within [X] days of any overdue payments. The [Buyer/Customer] will have [X] days from the receipt of the notice to make payment before late fees or interest are applied to the balance.
Credit clause with provision for payment against invoice
This version applies to payment against invoice.
The [Buyer/Customer] agrees to pay all amounts due under this Agreement within [X] days of receipt of the invoice. If any payments remain outstanding after the due date, the credit extended will be subject to the terms outlined in this Agreement, including interest and penalties.
Credit clause with provision for renewal of credit arrangement
This version applies to renewal of credit.
Upon the expiration of the current credit arrangement, the parties may agree to renew or extend the credit terms for an additional period. The renewal of credit will be contingent on the [Buyer/Customer]'s payment history and any changes to the terms of this Agreement.
Credit clause with provision for credit extension based on volume
This version applies to credit extension based on volume.
The [Seller] agrees to extend additional credit to the [Buyer/Customer] based on the volume of transactions during the previous [X] months. If the [Buyer/Customer] exceeds a predefined sales threshold, their credit limit will automatically increase by [X]%.
Credit clause with provision for suspension of credit
This version applies to suspension of credit.
The [Seller] reserves the right to suspend credit access if the [Buyer/Customer] fails to meet the agreed payment terms. During the suspension period, no further credit will be extended until the outstanding balance is paid in full.
Credit clause with provision for third-party credit checks
This version applies to third-party credit checks.
The [Seller] reserves the right to conduct periodic credit checks on the [Buyer/Customer] through a third-party credit reporting agency. If the results of the credit check indicate a decrease in the [Buyer/Customer]'s creditworthiness, the [Seller] may reduce or cancel the credit line.
Credit clause with provision for specific terms for large credit transactions
This version applies to large credit transactions.
For transactions exceeding [Amount], the [Seller] may require additional documentation or guarantees to extend credit. The [Buyer/Customer] agrees to provide the necessary documentation, such as financial statements or personal guarantees, before credit will be granted for large transactions.
Credit clause with provision for payment methods
This version applies to payment methods.
The [Buyer/Customer] agrees to make payments for credit extended via [payment method(s)]. Any changes to the preferred payment method must be agreed upon in writing by both parties before any further payments are processed.
Credit clause with provision for credit to cover specific expenses
This version applies to covering specific expenses.
The credit extended under this Agreement is intended to cover the costs of [specific expenses, e.g., travel, materials, services]. The [Buyer/Customer] may not use the credit for any other purpose without the prior written consent of the [Seller].
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.