When a customer requests credit terms, how you respond matters. A Credit Terms Decision Letter lets you clearly approve or decline the request in writing, helping to manage expectations, protect your business, and maintain a professional relationship.

Whether you're extending payment flexibility or deciding not to offer credit, this letter ensures your decision is communicated respectfully and accurately.

What is a Credit Terms Decision Letter?

A Credit Terms Decision Letter is a formal response issued by a business to a customer that has applied for credit facilities. The letter either:

• Approves the request, outlining the agreed credit limit, payment terms, and interest policies; or
• Declines the request, with a brief explanation and offer of alternative payment methods, such as pro-forma terms.

The letter is typically prepared by the finance or accounts team and may be sent by email or post.

Why Use a Credit Terms Decision Letter?

This letter protects both your business and the customer by:

• Documenting the agreed terms clearly and professionally
• Avoiding confusion or disputes around credit arrangements
• Demonstrating transparency, especially when credit is declined
• Maintaining goodwill, even if you’re not able to extend credit
• Creating a written record that can be referred back to later

Using a tool like Bind ensures your letter is legally correct, professional, and easy to generate and send.

What Should a Credit Terms Decision Letter Include?

The contents will differ slightly depending on whether you're accepting or rejecting the request.

If Credit is Approved:

• Confirmation of approval
• Credit limit (e.g. £25,000)
• Payment deadline (e.g. 30 days from invoice date)
• Interest rate for late payments
• Request for written confirmation
• Contact information

If Credit is Rejected:

• Polite explanation that credit has not been approved
• Reference to internal credit assessment
• Offer of continued trading on pro-forma or upfront payment terms
• Contact information for further questions

Common Questions About Credit Terms Decision Letters

Is this a legally binding document?
If the customer agrees in writing to the terms outlined in the letter, it forms part of your contract and is enforceable.

Can I offer reduced credit instead of full rejection?
Yes. You may approve credit at a lower limit or under shorter terms than requested, and detail this in the letter.

What if the customer doesn’t respond?
You should not extend credit until written confirmation is received. In the meantime, continue with standard payment terms (e.g. advance payment).

Does the letter need to include reasons for rejection?
A general statement referring to internal credit policy is sufficient. You do not need to provide detailed financial justifications.

Can this letter be sent by email?
Yes. Many companies send it as a signed PDF or email attachment for a formal but efficient delivery.

Credit Terms Decision Letter – Free templates

Option 1: Credit Terms Approved 

[Name of Credit Supplier]
[Address]
[Email]
[Phone]

[Date]

Re: Credit Application Decision

Dear [Name],

We are pleased to confirm that we have approved your application for credit facilities. This Credit Terms Decision Letter outlines the agreed terms for your account with Nova Industrial Solutions Ltd.

Credit limit:
Payment terms:
Late payment interest:

Please confirm via email that you agree to the proposed terms so we can activate your credit account.

If you have any questions, feel free to contact us!

Yours sincerely,

Option 2: Credit Terms Rejected

[Name of Credit Supplier]
[Address]
[Email]
[Phone]

[Date]

Re: Credit Application Decision

Dear [Name],

After careful consideration and review of the information provided, we regret to inform you that we are unable to offer credit terms at this time. This decision was based on our standard credit assessment procedures.

While we are unable to extend credit, we value your business and would be pleased to continue our trading relationship on a pro-forma basis. This means that payment would be required in advance of goods being dispatched or services being rendered.

We understand that this decision may cause inconvenience. Please don’t hesitate to get in touch if you’d like to discuss other payment options.

Yours sincerely,

What Happens If You Don’t Send a Credit Terms Decision Letter?

Without this letter:

• Customers may misunderstand your credit policies
• Unclear or informal arrangements could lead to payment delays
• You risk disputes if terms aren’t properly documented
• Your business may appear disorganised or inconsistent

Providing a written decision keeps the relationship clear, courteous, and compliant.

Create a Credit Terms Decision Letter in minutes with Bind

Bind makes it simple to approve or reject credit requests using clear and sound language. Create a Credit Terms Decision Letter, edit as needed, and send it directly to your customer—all from one place.