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When Does A Vendor Credit Line Show Up On My Business Credit Reports?

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Vendor Credit

Getting approved for a line of credit with a supplier is simply an opportunity for you to start building your company’s creditworthiness.  The key to establishing positive credit is to make regular puvendor credit rchases using your vendor credit lines and then paying invoices on or ahead of the due date.

If you do not make regular purchases then there is no way for you to establish any kind of payment history. So it is vitally important that you carefully select the suppliers you apply for credit with.

Make sure that you can use the products and services they offer to develop and grow your business.
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Vendor Credit Lines Are Like Small Business Loans

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Vendor Credit Lines

Qualifying for a bank loan or other traditional sources of business financing can seem like an impossible task if you’re like most small business owners that haven’t even begun to establish credit in the name of your business let alone have any type of business credit scores.Vendor Credit

You probably believe that you have no other choice but to use your personal credit but let me share with you a viable alternative before you slap down your plastic.

Vendor credit lines also known as trade credit is when a company extends credit to your company in order to allow you to buy its products and services upfront but defer the payment for a later date.

After you purchase a product they will issue an invoice which must be paid according to the terms of your agreement. If you’re a startup company or have no business credit then most net 30 vendors will have net 10 or net 15 day terms initially. Keep in mind these terms can be extended to net 30, 90 or even 120 day terms if you continue to build a solid payment history with your vendors.

Some of the major benefits include:

  • Conserving Cash Flow – By purchasing products or services and deferring the payments for a later date your business is able to conserve cash and have the funds it may need for other important expenses.
  • Establish Business Credit Scores – As each invoice is paid on time you begin establishing a positive payment history on your company’s credit files. Remember it takes a minimum of four accounts reporting to generate business credit scores on your Dun & Bradstreet business credit report.
  • Improve Credit Capacity – When your vendor credit limits increase so does your company’s overall credit capacity. Larger credit limits showing on your files will improve the overall creditworthiness of your business simply from the fact that banks and lenders will see that other companies are willing to extend credit to you in much larger amounts.
  • No Personal Credit Check or Guarantee – The majority of vendors will not require a personal credit check or guarantee which clearly protects your credit scores and liability.

Now for business credit building purposes there are some key factors that never get mentioned which can make all the difference in the world.

You see not all vendors report your payment history, in fact out of half a million vendors in the U.S. less than 6,000 supply payment data to a business credit bureau.  So either you should select the right companies to apply with or you can always purchase one of DNBs trade reference programs.

Several other factors to consider are the frequency of reporting and how the data is being reported by your vendors. Some report on a quarterly or even yearly basis which does not help in building your profile in a timely manner.

As far as your payment data it’s vital that the actual vendor credit limits that your company is approved for displays on your file not just the amount owed. Some vendors will not report this information and it can have a dramatic impact on how lenders view your company’s creditworthiness plus it affects the size of the credit limit recommendations that business credit bureaus list on your file.

I know this can seem confusing and time intensive but there are ways to streamline this whole process taking all the guesswork and frustration out of the equation. By taking advantage of all the tools and resources available you can improve your company’s ability to qualify for the business financing it needs.

Looking to access vendor credit lines? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

 

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit services membership helping business owners build business credit without personal guarantee. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Are You Getting Instant Business Credit?

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DollarIf you’re at the beginning stage of applying for business credit for your company than you have probably seen the numerous articles, books, and posts explaining the importance of first starting with vendor credit also known as trade credit.

 

However, one of the biggest mistakes made by small business owners during this stage is applying for the wrong vendor accounts that grant instant business credit.

 

While some may have a tendency to believe that the more the merrier is a sound strategy I tend to totally disagree. The reason is simply getting approved for vendor credit is one thing but what really matters is three critical factors that seem to never get mentioned which are:

 

Reporting

Frequency

High Credit

 

Reporting

There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report to the business credit bureaus! So part of any sound business credit building strategy should include careful selection of vendors that report to the business credit bureaus. It’s also important to note which business credit bureau they report to.

 

Frequency

In addition you will need to select vendors that not only report to the business credit bureaus but also report on a monthly basis.
Why is reporting on a monthly basis so important?

The reason is there are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so if your payment experience is not reporting until months later this can drastically impact the speed in which you plan to build a strong business credit file.

An example of an instant business credit vendor that reports on a monthly basis is a company like Quill.

Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

Quill offers a net 30 account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. For small orders you can get approved with a listing on the 411 directories and have a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

 

High Credit

Unfortunately there are vendors who report the balance owing as your high credit limit on your business credit file and not the true credit limit your business has been approved for.

For example, let’s say you’re approved for a $2,000 credit line with a vendor and you purchase an order of $50.

The incorrect reporting by this vendor shows:

High Credit ($) 50

Now Owes ($) 50

 

The correct reporting by the vendor should reflect:

High Credit ($) 2,000

Now Owes ($) 50

 

It’s always best to select vendors that report the true high credit limit that your business has been approved for and not just the balance owing.

 

This factor alone can impact the credit limit recommendation suggested for your business which is provided by the business credit bureaus in your profile report.

 

While you can obtain instant business credit for your business the process of building a strong business credit profile and score does take careful planning and a sound strategy. By revealing these three critical factors I hope to make the process easier and more effective for you.

 

As long as you select vendors that report, select vendors that report timely and select vendors that report true high credit limits than you are well on your way to business credit success!

 

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE  “Eight Steps To Ultimate Business Credit Without A Personal Guarantee Audio Seminar“($597 Value), available by simply submitting your email below=>

How to Start Building Business Credit

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Vendor CreditVendor credit lines commonly known as “trade credit” is the largest use of capital from business to business and remains the #1 alternative to personal and small business loans. The SBA even reports that vendor credit is the single largest source of small business lending in America today. It also happens to be the initial foundation for businesses to start building business credit.

 

 

So what is vendor credit?

 

Vendor credit is when a company, like an office equipment supplier, allows your business to purchase products and pay for them at a later date. Typically the terms range from Net 15, Net 30, Net 60, Net 90, or even Net 120 payment terms. These vendor credit lines work like a charge card meaning that the balance must be paid in full on or prior to the due date.

 

The primary benefit to using vendor credit lines is that it will provide your business with thousands of dollars in products and services it needs up front while allowing your business to defer the payments for later. This helps you conserve cash flow for more critical short term expenditures your business may have. The flexible payment terms also allows your business plenty of time to pay the invoice when it comes due.

 

A secondary benefit is vendors report your positive payment experience to the business credit bureaus. The more vendors you establish credit lines and payment experience with the stronger the business credit profile you will build. This alone can positively impact the size of the credit limit recommendation for your business which is determined by the business credit bureaus and publicly disclosed on your business credit file.

 

However, one of the biggest mistakes made by small business owners is assuming that every vendor reports their payment history to the business credit bureaus. Currently there are over 500,000 vendors who extend lines of credit to businesses but less than 6,000 report your payment experience to the business credit bureaus.

 

So when you start to build your business credit file be sure to select vendors that report. You can verify this by inquiring with a vendor that you plan to apply with. Be sure to ask what business credit agency they report to and how often they report.

 

One of my favorite aspects to vendor credit lines is the minimal qualifications required for approval. In many cases an application only requires your business contact information, Federal Tax ID#, Dun & Bradstreet#, authorized name and signature and not your social security number or personal guarantee.

 

The specific vendors requesting only this information will pull a business credit report to base their approval which makes obtaining vendor credit lines much easier and more convenient compared to credit cards or loans. A prime example of one of these types of vendors is a company called Quill. Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

 

Quill offers a net 30 account and reports to Dun and Bradstreet.  Best of all they report your payment history every 30 days. For small orders you can get approved if your business has a listing on the 411 directories and a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

 

As you can see vendor credit lines provide your business a way to build a strong business credit file while avoiding the use of your personal credit and guarantee.

 

*Don’t want to bother doing all this research to find what vendors report to the business credit bureaus? Well, the good news is that I have compiled a list of vendors that are actively reporting to the business credit bureaus and more specifically which ones they report to! To receive this and many other secret business information join my Business Credit Insider’s Circle!

 

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE  “Eight Steps To Ultimate Business Credit Without A Personal Guarantee Audio Seminar“($597 Value), available by simply submitting your email below=>

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