The Pros and Cons of Using Trade Credit to Fund Your Business

Owning and operating a business, no matter what its size, can be a time-consuming and risky undertaking.  Despite your best efforts, there will come a time when you need to seek help from an outside source.  So, where do you go?  What options do you have?  Are you even prepared? Many business owners find solace in the fact that trade credit is available through their favorite suppliers.  But what is trade credit and can it really benefit your business?

Understanding the Basics of Trade Credit

Trade credit is easy to understand.  Like cash credit, it gives the borrower a certain credit limit with which to make purchases from a particular vendor, such as repeating inventory, fuel for trucks, etc.  The only catch is that with trade credit, you can only purchase items from that specific supplier.  This not only gives that supplier a continuous stream of income to ensure future stock, but it also has its advantages for your business as well.

Trade Credit Ensures Guaranteed Supplies

While having cash on hand to make purchases may seem to be the more convenient option, trade credit can make supply shopping a whole lot easier. If your vendor knows he can count on you for a specified order every day, week, or month, he can adjust his inventory accordingly so you know that the right amount of crabs will be available for your restaurant, or that you will never run out of wire, lumber, computer chips or whatever is a critical part of your business.

Trade Credit Gives You Industry Insights

Without a regular relationship and scheduled transactions with your vendor, once a supplier has your money and the transaction is over then you will probably not hear from them again unless there is a problem. This means you could miss out on some amazing deals.  With trade credit, however, suppliers are in constant contact with you and are more likely to pass on money-saving offers to a loyal customer. Perhaps that is why this option isso ideal for companies that are just starting out or that plan on continually expanding throughout their years of operation.

Trade Credit Increases Your Credit worthiness

When one supplier finds you worthy of trade credit, then other suppliers will begin to as well. After a while, you could have numerous unsecured business loans at one time, with all of them funneling necessary capital into your thriving business. CorporateCashCredit.com even offers a program which increases client Paydex scores to at least 80 within just 45 days.  This makes getting unsecured business lines or credit and trade credit a real possibility, even to businesses those havetaken serious economic hits in the past. 

To apply for trade credit, increase your Paydex score to 80 or more, or to just have your current credit situation analyzed, for visit CorporateCashCredit website.