Now that you may not be able to run out and get a HELOC to finance your business, you may be taking a look around: where to find available, affordable credit. Nothing like a crisis to make clear the obvious. The cheapest credit in the world is AP. So how do you get more of it?
In our business, we look at the credit of buyers and potential buyers for our clients all day long. These businesses range in size from Exxon to Exton Country Store in Exton, PA, and can share with you what you must do to get approved by your vendors.
1) Keep your nose clean – i.e., no liens, especially tax liens
2) Pay your bills consistently
3) Keep your AP less than your AR – your balance sheet is a snapshot of your business
4) Your availability of credit – i.e., liquidity souces
This critical information is gathered and reported by a small group, primarily Equifax, Experian, D&B, but the information can have giant implications for you. If you’re a small business it’s critical to know how they work….
Upshot: Make your financial statements available to convince your vendors to give you credit. It’s cheap, plentiful and may be your best source of financing right now.