What Are Trade References and How Many Do You Need?
A trade reference is another supplier vouching for how reliably your business pays its accounts. Almost every NZ trade account application asks for at least one — here's what they actually check, how many you'll typically need, and how to give a good one when someone asks you for it.
What a Trade Reference Is
A trade reference is an existing supplier — one your business already buys from on a trade account — who a new supplier can contact to ask how you pay. It's the trade-credit equivalent of a job reference: instead of checking your character, a new supplier is checking your payment history, specifically whether you pay on time, close to on time, or consistently late.
Trade references are one part of the broader trade account application process, alongside the credit application itself and, in some cases, a personal guarantee.
How Many You Typically Need
Most NZ suppliers ask for two to three trade references when a business applies for an account. If your business is genuinely new and doesn't have existing trade accounts to reference, say so upfront — many suppliers will still open a small provisional account and build the credit limit from there, rather than requiring references that don't yet exist.
What Suppliers Look For
When a supplier calls or emails a trade reference, they're typically asking a handful of direct questions: how long has this business been an account customer, what's the average time to pay an invoice, has the account ever been placed on hold, and would you extend credit to this business again. Consistently prompt payment across your existing accounts is the single strongest thing a new supplier can hear.
Free NZ Trade Reference Letter Template
If you're the one being asked to provide a reference for a customer, a short, factual letter is usually all that's needed:
To whom it may concern,
[Customer Company Name] has held a trade account with [Your Company Name] since [month/year], with a current credit limit of $[amount] on [payment term] terms. Over that period, the account has [consistently paid on time / generally paid within terms / occasionally paid late], and we would [be happy to / be able to] extend trade credit to this business again.
Please contact us on [phone/email] if you require further detail.
[Your name, title, company]
Keep it factual — a reference is a statement of payment history, not a character endorsement, and suppliers reading it are looking for specifics (limit, term, how consistently paid) rather than general praise.
Frequently Asked Questions
Can I use a bank as a trade reference?
Usually not — trade references specifically mean other suppliers you buy from on account, not a bank or financial institution.
What if I don't have any trade references yet?
Tell the supplier directly. Many will offer a smaller provisional credit limit to a new business, then increase it once a payment history has been established with them directly.
How long does a trade reference check take?
It depends on how quickly the referenced suppliers respond — often a few business days, though it can take longer if references are slow to reply.
Do trade references expire?
Not formally, but suppliers generally want a reference that reflects a reasonably recent and ongoing relationship, not one from years ago with an account that's no longer active.
Can a supplier refuse to give me a trade reference?
Yes — there's no obligation to provide one, though most established suppliers will for a customer in good standing, since it's a small, low-cost courtesy within the trade.
Modern Trade Credit, Without the Paperwork
PaidTerms lets NZ businesses offer flexible payment terms without a new customer needing a stack of trade references first.
Read next: how a trade account application works, or what a trade account is.
