Credit Policy

Australian Wholefoods
ACN 111 121 852

Credit Policy

1. Purpose
The purpose of this Policy is to outline procedures for:

• opening new customer credit accounts and establishing customer credit limits;
• reviewing and varying customer credit limits; and
• maximizing the collection of monies from customers for goods sold on credit.

2. Scope
All customers must go through a formal credit approval process prior to any account being opened with Australian Wholefoods Limited (AWF).

3. Procedure to open a new account:

3.1 All new customers must complete a credit application (Credit Application) in full and, if applicable, a Distributor Agreement.

3.2 Commercial Manager (CM) will review the customer’s credit worthiness by obtaining a credit report (Report) from an accredited provider for all accounts in excess of $20,000 credit limit. A copy of the Report must be attached to the Credit Application and filed by CM.

3.3 The customer’s trade references, as detailed in the customer’s Credit Application, will be checked by CM and reviewed with contacts in the industry.

3.4 Credit approval is required in relation to the credit limit in accordance with the following table:

Credit Limit Approval required by
0 – $100,000 Commercial Manager
$100,000 – $400,000 Chief Financial Officer / AWF CEO
>$400,000 Board

3.5 If approval has not been provided pursuant to clause 3.4 of this Policy, CM must hold all orders when the customer’s credit limit is reached.

3.6 CM will complete the appropriate registration form on the Personal Property Securities Register detailing AWF’s interest in the goods to be supplied to the customer at the time the customer’s account is opened by Customer Service and prior to delivery of any goods to the customer.

3.7 CM will advise each customer and relevant sales account manager whether a Credit Application has been approved.

3.8 If a Credit Application has not been approved in accordance with this Policy, COD trading terms may be offered to the customer at the discretion of the Chief Financial Officer

4 Key factors in determining credit worthiness

4.1 The following factors when determining a customer’s credit worthiness:

a. completed Credit Application;
b. full compliance with AWF’s terms and conditions of trade by the customer;
c. registration of business;
d. favourable trade references (at least 2, preferably 3);
e. length of time in business;
f. amount of credit requested;
g. validation process though accredited credit provider

4.2 If the customer refuses to sign Guarantee, the account is referred to the Financial Controller for written approval to open without guarantees.

5 Relevant changes to existing customers

5.1 If a Relevant Change occurs with respect to an existing customer, a new Credit Application and Distributor Agreement (if applicable) will be sent to the customer to complete in full and return to CM, in which case the procedure for new customers outlined in clause 3 of this Policy will apply.

5.2 The Relevant Changes are:

a. increase in credit limit;
b. change of owner;
c. change of directorship (non-major retail customers only);
d. change of trading name;
e. additional delivery points;
f. change of address;
g. change in buying group;
h. any other circumstance determined by the Chief Financial Officer or CEO.

5.3 If necessary, CM may close the customer’s account upon the Relevant Change occurring.

6 Collection of overdue accounts
The following table outlines the actions that may be taken by CM with respect to overdue accounts:

No. of days overdue Action
1 – 2
  • All non-major retail customers’ accounts may be put on hold
  • If account is on hold, CM may offer customers ‘payment before delivery’ account after appropriate discussions between CM and sales. 
2 – 21
  • CM and sales team to follow up payment with customer.
21 – 30
  • Customer to be issued with a letter of demand from AWF requiring payment within 7 days.
  • CM to reconsider credit limit.
30 +
  • Matter referred to legal department.
  • Account closed.

7 Monitoring of ERP system credit limits

7.1 All customer credit limits are entered into the SAP ERP system in the credit limit filed. This field indicates the highest credit limit permitted for outstanding invoices. If this limit is exceeded, delivery of the customer order is blocked.

7.2 Orders are automatically blocked by the ERP system when the order is greater than the customer’s credit limit.