Vendor credit is a very useful type of unsecured credit for businesses, both for managing cash flow and for building credit. Most vendor credit accounts have terms of 7, 10, 15, or 30 days. Some longer terms do exist, and there are even revolving vendor credit accounts, that don’t have to be paid in full, each month.
The key thing to understand about vendor credit accounts is that you can never have too many of them. “The more, the merrier.”
You should also understand that vendor credit accounts are essential in building a good Business Credit Profile. They are good because they are:
- Easy to get.
- Easy to use.
- Usually “free”.
They aren’t complicated. Most vendor credit accounts, such as Net 30 accounts, do not charge any interest or fees during the 30 days. Late fees may apply.
On the flip side, many vendor credit accounts offer DISCOUNTS if you pay early. Instead of costing you money, they could actually save you. Terms such as “Net 30, 2% 10” would mean that if you pay the invoice within 10 days you can deduct 2%.
Because vendor credit accounts are also easy to get and simple to use, makes these accounts ideal tools for businesses to build business credit.
Some accounts are, of course, easier to get than others, and because of this, you should always start with certain “easy” starter accounts and then add on additional vendor credit accounts once your “core” accounts are established.