Copyright © 2008 Small Business Delivered All Rights Reserved SmallBusinessDelivered.com
[Home] [Newsletter] [Blogs] [BookStore] [Business Forms] [Business Software] [Office Products] [Article Archives] [About Us] [Contact Us]
Most businesses in today's marketplace are in the unenviable position of having to provide credit to their customers. This is especially true if you own a small business that sells to large businesses. Your customers due to their size and buying ability can put the squeeze on you just about anytime they want. So you end up extending them credit. Maybe you give them thirty days to pay you. But I bet they take sixty days or longer to actually get you a check. This situation can put a lot of pressure on your company’s finances.
To help alleviate the problem you need to ask your suppliers for lines of credit too. You can't afford to be paying for supplies and materials up front when you don't get paid up front also. An added benefit of this additional credit is that it's usually interest free. You do have to keep in mind that some companies can penalize you a small percentage for paying late but many do not and some will even offer a discount for paying early.
You'll find that supplier credit lines are integral to helping improve your cash flow. And as your business grows your suppliers will be able to develop a deeper relationship with you. Plus your bank will appreciate you having those lines of credit. Because if that credit is available to you then you're less reliant on the bank when money is tight. To the bank this is a good thing.
So how do we go about establishing these lines of credit? We ask of course. If you do business with other small businesses then all you probably have to do is ask for a credit line. If you've already got a solid relationship with them then they'll probably be more than willing to extend credit. Basically a hand shake and a quick letter of credit that you can show your bank later if need be. I really do suggest you make sure to get a letter of credit for your records even if your supplier never had you fill out a credit application with them.
Most of your suppliers will provide you with some sort of basic credit application. If they've got a good relationship with you this will still only be a formality. I do suggest you be proactive and put together a basic company information sheet. It should have information like the legal name of the business, your employer identification number, business address and phone numbers, plus your best credit references on it. Many businesses will accept this instead of having to fill out a credit application as it contains most of the information they are seeking anyway.
If you are applying for credit with a larger company the application process will be a bit more thorough. Make sure your credit references are good and you might want to consider letting them know that you've used them as references. Larger companies want your business too but are more wary when extending credit to small companies even if you have a history with them. Even if you have done a lot of business with them they realize that you had to pay up front to get what you needed. Their question becomes how good are you at paying when they've already given you what you needed?
Page 2
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
To help alleviate the problem you need to ask your suppliers for lines of credit too. You can't afford to be paying for supplies and materials up front when you don't get paid up front also. An added benefit of this additional credit is that it's usually interest free. You do have to keep in mind that some companies can penalize you a small percentage for paying late but many do not and some will even offer a discount for paying early.
You'll find that supplier credit lines are integral to helping improve your cash flow. And as your business grows your suppliers will be able to develop a deeper relationship with you. Plus your bank will appreciate you having those lines of credit. Because if that credit is available to you then you're less reliant on the bank when money is tight. To the bank this is a good thing.
So how do we go about establishing these lines of credit? We ask of course. If you do business with other small businesses then all you probably have to do is ask for a credit line. If you've already got a solid relationship with them then they'll probably be more than willing to extend credit. Basically a hand shake and a quick letter of credit that you can show your bank later if need be. I really do suggest you make sure to get a letter of credit for your records even if your supplier never had you fill out a credit application with them.
Most of your suppliers will provide you with some sort of basic credit application. If they've got a good relationship with you this will still only be a formality. I do suggest you be proactive and put together a basic company information sheet. It should have information like the legal name of the business, your employer identification number, business address and phone numbers, plus your best credit references on it. Many businesses will accept this instead of having to fill out a credit application as it contains most of the information they are seeking anyway.
If you are applying for credit with a larger company the application process will be a bit more thorough. Make sure your credit references are good and you might want to consider letting them know that you've used them as references. Larger companies want your business too but are more wary when extending credit to small companies even if you have a history with them. Even if you have done a lot of business with them they realize that you had to pay up front to get what you needed. Their question becomes how good are you at paying when they've already given you what you needed?
Page 2
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
Check out our E-Book BookStore as we are always adding new titles to our selection.
|
 |
Below you'll find links to some other useful websites that you might want to check out.
U.S. Chamber of Commerce
SCORE
Small Business Administration
Internal Revenue Service
Prosper.com Person to Person Lending
Better Business Bureau Online
USA Today Franchise Solutions
USA BizMart Business Broker Directory
Dunn and Bradstreet
Federal Trade Commission
SCORE
Small Business Administration
Internal Revenue Service
Prosper.com Person to Person Lending
Better Business Bureau Online
USA Today Franchise Solutions
USA BizMart Business Broker Directory
Dunn and Bradstreet
Federal Trade Commission
Our BookStore, Software Store, and Office Products Store are offered to you in partnership with Amazon.com so you can feel secure in the purchases you make.
Featured Finance Articles
Sponsored Links
|
.jpg "Cash Miller - Copy (2)")
Need A Little Breathing Room? Ask Your Suppliers For A Credit Line
If your business model is business to business then you've probably got a familiar problem. Like most such businesses you've got to wait to be paid. In the mean time you need materials for the next job. Your suppliers can probably help.
By: Cash Miller
If your business model is business to business then you've probably got a familiar problem. Like most such businesses you've got to wait to be paid. In the mean time you need materials for the next job. Your suppliers can probably help.
By: Cash Miller
 |
 |
 |
 |
 |
 |
 |
 |
Entrepreneurs Helping Entrepreneurs
|
Cash Miller
Sponsored Links
Free Newsletter Signup!
Bartering Organizations
Business Brokers
Business Franchises
Business Incubators
Chambers of Commerce
Ezine Article Sites
Factoring Companies
Freelance Opportunities
Inventory Liquidators
Traffic Exchanges
Business Brokers
Business Franchises
Business Incubators
Chambers of Commerce
Ezine Article Sites
Factoring Companies
Freelance Opportunities
Inventory Liquidators
Traffic Exchanges
Business Directory
Find the Pieces to Your Business Puzzle Right Here
Find the Pieces to Your Business Puzzle Right Here
Are Banks Turning You Away? You Might Want To Consider Person To Person Lending
In an age of tightening credit, when banks care about nothing more than your fico score and financial statement. When they no longer care about how good your product might be or about how long you've done business with them. More people are turning to micro lenders such as Prosper that help facilitate person to person lending.
How Does Accounts Receivable Factoring Work? A businesses strongest asset is its customers. Unfortunately they are also not normally considered a liquid asset. But you can still leverage that asset if you need to. And accounts receivable factoring is a way to do. You just need to be careful using this method.
The Truth About Building Your Business Credit All businesses whether large or small usually rely on some form of credit to help get things done. In today’s business environment establishing your credit is more important than ever. What you may not know is the financial risk you may be personally taking when you sign on the dotted line.
Tips On Using Business Lines Of Credit
Okay so you've managed to land that much coveted credit line from your bank. But now you want to make sure you use it wisely.
In an age of tightening credit, when banks care about nothing more than your fico score and financial statement. When they no longer care about how good your product might be or about how long you've done business with them. More people are turning to micro lenders such as Prosper that help facilitate person to person lending.
How Does Accounts Receivable Factoring Work? A businesses strongest asset is its customers. Unfortunately they are also not normally considered a liquid asset. But you can still leverage that asset if you need to. And accounts receivable factoring is a way to do. You just need to be careful using this method.
The Truth About Building Your Business Credit All businesses whether large or small usually rely on some form of credit to help get things done. In today’s business environment establishing your credit is more important than ever. What you may not know is the financial risk you may be personally taking when you sign on the dotted line.
Tips On Using Business Lines Of Credit
Okay so you've managed to land that much coveted credit line from your bank. But now you want to make sure you use it wisely.