4th Step: Selected Vendor Credit
Optimizing Business Credit Requires 5 Vendor Lines of Credit
A vendor line of credit is when a company (vendor) extends a line of credit to your business on “Net 15, 30, 60 or 90” day terms. This means that you can purchase their products or services up to a maximum dollar amount and you have 15, 30, 60 or 90 days to pay the bill in full. So if you’re set-up on Net 30 terms and were to purchase $300 worth of goods today, then that $300 is due within the next 30 days.
The Facts About Vendor Credit
- You can get products and services your business needs and defer the payment on those for 30 days, thereby easing cash flow. This is called “Net 30”.
- When your first Net 30 account reports your “tradeline” to Dun & Bradstreet, the DUNS system will automatically activate your file if it isn’t already. This is also true for Experian and Equifax.
- Some vendors will approve your company for Net 30 payment terms upon verification of as little as an EIN number and a 411 listing.
- Always apply first without using your SSN. Some vendors will request it and some will even tell you on the phone they need to have it. Submit first without it.
- Some vendors require an initial prepaid order before they can approve your business for terms.
- You need to have a total of at least five (5) Net 30 day pay accounts reporting. Your vendors do not necessarily have to serve 100% of your business needs.
- Pay your Net 30 vendor accounts in-full and on-time!
- You must be patient and allow time for the vendors’ reporting cycles to get into the reporting systems. It typically takes 3 cycles of “Net” accounts reporting to build credit scores.
There are over 500,000 vendors extending credit, but less than 6,000 that report.
Next, you will have the option to access our highly researched database of reporting vendors. Once you have access, you will be able to see what each vendor requires to approve your business for credit before you apply.