As a business owner you do not want to depend on one form of credit. Many business owners make the mistake of thinking that the only option they have to raise capital and to have the money that they need is to take a term loan and work off of it. The truth is that you have other funding options that you may or may not have considered that can be very valuable sources of positive cash flow. Vendor credit is potentially one of those lines of credits that you should be exploring.
What is It?
Vendor credit is an extended line of credit for your business that allows you to purchase services and products that are offered under a deferred payment structure it can be the key to getting inventory and services that are critical to your business when you do not have the cash on hand to pay up front for the services or products.
There are some clear benefits to this option that can help you to not only grow your business but to help it thrive. Some of the most recognized benefits of vendor credit are:
- Establishment of business credit
- No personal credit checks
- Improving creditworthiness
- Conserving your cash flow
Establishment of Business Credit
Having a positive business credit profile is important to the success of any business. Using vendor credit can be the first step in establishing your business credit.
NO Personal Credit Checks
Keeping your personal credit history separate from your business credit history is important but with many funding options it is not really possible, with vendor credit programs it is. If you have some mars on your personal credit or you are overextended this can be the ideal solution.
Improving your Credit Worthiness
Utilizing vendor credit the right way can help you to paint a more positive picture of your creditworthiness.
Conserving Your Cash Flow
You do not have to tie up your cash when you use this option. You can use the cash for other needs like paying salaries, marketing or for other products/services that do not offer vendor credit.
Successful businesses do not put all their eggs in one basket they know that spreading out debt is the best way to always have a positive cash flow in support of their business. Being creative with your business finances can help you to ensure your business continues to thrive.