Gaining small business credit and raising your small business credit rating will take time and patience as your small business grows and develops. There are many ways for your small business to do that. You can get bank credit, open a credit card, use trade credit with other companies and leasing options for your office equipment or business equipment. Finding ways to help your business credit can only benefit your small business.
Trade credit can be a great profit to your small business credit. When your small business makes a purchase with one of its suppliers for material, the supplier will often allow your small business a grace period before you have to make a payment. Trade credit is a way for businesses to gain revenue from sales that businesses have made. When using trade credit, the terms "net 30" or "net 60" is what you will here when you make your purchase. These terms mean your small business has either 30 days or 60 days to pay for their purchase. Trade credit is many times considered a short-term, interest-free loan for small business.
When using trade credit, your small business may also be offered to pay "net 10" with a "1 percent". These terms mean that if you pay your payment within 10 days from your purchase, you will receive a 1 percent discount off your payment. If you make your payment after 10 days, your small business will have to pay the full amount of the payment. As you make your payments to suppliers that offer your small business discounts, be cautious when making your payments with discounts. A supplier may offer you a chance to save some money by making a payment early with a discount, but you may end up put your cash flow into a tight spot. As a small business you will want to keep your revenue and expenses flowing together and building your small business credit. Paying your expenses before you receive your revenue could be depriving your small business of the cash flow it needs.
Your small business credit is very important when you are collecting monies from clients you have worked with. When you have revenue coming in after you have done the work required with your client; this will give you the cash flow you need to pay your supplier payments, along with your payroll and office payments. This will improve your small business credit and your revenue will continue to grow. Not all clients you work with will be able to make their payments to your small business on time. To help your small business, setup a credit policy for your clients to follow. A couple things you can ask for are:
As a small business a few things you can do to make sure you will get payment from your clients or suppliers are simple and take a few minutes to fill out. Ask for your client or supplier to fill out a credit application. A credit application will have the basic information about the company you are going to do business with; the company, location, tax information, etc. Along with the credit application, ask for references. Asking for references is a great way for you as the small business owner to make sure the company you are going to work with is legitimate and has the funds to pay you.
Small business credit is easy to build when you demonstrate strong financial control. Enroll in automatic payment plans as this will improve your small business credit since you will never have a late or missed payment.
Corporate Credit Concepts specializes in small business credit. For more information about small business credit and how it might benefit your business, please CLICK HERE for a free phone consultation.