The first limit is set with almost no information, which is exactly why it should be small and why the system’s real job starts on the second invoice.
Key takeaways
The application is a structured form, not a PDF somebody types up later.
Filed accounts are old and optimised for tax; read them for shape, not health.
Trade references are chosen by the applicant, so they are nearly worthless.
Open small. The first three invoices are worth more than any document.
Write down the reason for the number, because the next reviewer needs it.
What the application asks for
Fig 1. The intake, top to bottom. The most valuable field is the one asking what they expect to spend, because it is the number the limit gets compared against.
Database
Analytics
Front-end & mobile
People
Why the form matters more than it looks
A credit application that arrives as an email attachment and gets filed becomes unfindable within a quarter. The same information captured as fields becomes a record that a review can compare against three years later, which is the only moment it is genuinely useful.
There is one model call in this system and this is where it earns its place: taking the PDF that a customer insists on sending and turning it into those fields, with anything it cannot find left explicitly null rather than guessed at.
What filed accounts are worth
Read them for shape, not for health
They are old. A small company files up to nine months after its year end, so you are frequently reading something twenty-one months out of date.
They are abridged. Small-company filings often show a balance sheet and little else. There is no profit figure to be reassured by.
They were prepared to minimise tax, which is legitimate and which means a healthy business can look thin on paper.
What is worth reading: net assets, whether they are negative, the trend across two filings, and whether anything is charged against the company.
What is worth more: a filing that is late. It is the single most useful signal in the whole document, and it does not need reading to find.
A late filing does not mean a company is failing. It means the people running it are either very busy or not in control of their paperwork, and both of those correlate with how you will be paid.
Why references do not work
Fig 2. Three inputs to the opening decision and their honest weights. The box underneath is what actually decides the limit, and it does not exist yet on day one.
Machine learning
Analytics
People
Open small on purpose
The opening limit should cover roughly one month of the spend the customer said they expect, rounded down. If they expect four thousand a month, three thousand is a sensible opening position and it is not an insult; it is the number you can review upwards in twelve weeks with evidence.
The customer who objects strenuously to a small opening limit is providing information. A business with functioning cash flow can work inside three thousand pounds for a quarter, and one that genuinely cannot is telling you something the accounts did not.
Write down why
The reason for the number matters as much as the number. Three thousand because their stated spend was four and there is nothing adverse is a different starting point from three thousand because net assets are negative and we are proceeding cautiously.
Two years later, somebody reviewing this account will find one of those two sentences and act completely differently depending on which. Storing the reason costs one text field.