When we talk about recommended vendors for business credit, there are several questions that pop up. First, what exactly do we mean by vendors? Then, what makes some vendors recommended for business credit, and others not? After that, who are these recommended vendors and how do you find them? Let’s find out.
What Do We Mean by Vendors?
This is probably the best place to start. When using the term “credit from vendors,” we are talking about credit from companies that are not financial in nature, like banks and other credit unions. Rather, their focus is on retail, and they extend net terms on invoices to customers as a courtesy.
This means customers have either 30, 60, 90, or however many days the net terms state to pay in full. It’s different from a credit card because it is not revolving credit. So, when we talk about vendors, this is not a card that you apply for. This is a retail company that sells products you can use in your business, then you do not have to pay the invoice immediately.
What are Vendors for Business Credit?
Don’t a lot of vendors offer net terms? What makes them so special? Well, there is a small subset of vendors that we call starter vendors. Starter vendors do two things that not a lot of vendors do.
First, they will extend net terms to your business without a credit check. That’s not to say that they do not have standards. They will not give net terms to just anyone. However, they will consider other factors besides credit score. For example, they may take into consideration:
- Current relationship with the customer
- Time in business
- Average balance in business bank account
- Annual income
- And more
But that’s not all. Getting net terms without a credit check is great, but it does nothing to build your business credit score if the payments do not show up on your business credit report. True starter vendors will also report the payment you make to the business credit reporting agencies.
Again, doesn’t sound like a big deal, right? That changes when you realize that only 7% of companies that extend credit of any type to businesses report positive payment history to business credit reports. A lot more will report negative payment history, but that does not help build a strong business credit score.
Finding Vendors for Business Credit
Vendors do not typically make it obvious if they report or who they report to. If you call, you may or may not get to talk to the right person to ask. You’ll likely be on hold for a long time, and once you get to someone they may or may not tell you.
One option is to just apply for vendor accounts and hope you get approval. Then monitor your business credit report to see if they are reporting. However, this trial and error method will take a lot of time and will likely cause a serious amount of frustration
It will take away from you doing what you need to be doing, which is running your business. Yet, it doesn’t have to be this way. There is a better option. A business credit specialist can help you find vendors that you qualify for, and that will report your on-time payment, not just late or missed payments.
They know who to talk to, what questions to ask, and the language to use to get the answers you need. This alone saves you a huge amount of time and frustration. You not only avoid applying for accounts that you do not yet qualify for, but you also find those accounts that will actually help you build your business credit score.
Our business credit specialists have a list of starter vendors that they already work with. This list is always changing, as vendors and lenders are always changing their policies.
Also, it takes more than 3 or 4 vendors to build a strong enough score to move on to the next level of credit. Our specialists work with many vendors that can help you get things going. Here is a sample of some recommended vendors for business credit.
Grainger Industrial Supply
One of the first vendors for business credit business owners find out about is Grainger. They sell hardware, power tools, pumps and more. They also do fleet maintenance, and they report to Dun and Bradstreet. If a business doesn’t have a credit score already, they will want to see additional documents like accounts payable, income statement, balance sheet, etc.
To qualify, you need:
- To be an entity in good standing with Secretary of State
- EIN number with IRS
- Business address (matching everywhere)
- D-U-N-S number
- Business License (if applicable)
- Separate, dedicated business bank account
- To be registered to Secretary of State (SOS) for at least 60 days
Marathon
Marathon Petroleum Company provides transportation fuels, asphalt, and specialty products throughout the United States. The products support commercial and industrial, as well as retail operations. They report to Experiand and Dun & Bradstreet.
To qualify, you need:
- To be in good standing with the Secretary of State
- An EIN number with IRS
- A Business address- matching everywhere.
- D-U-N-S number
- Business license (if applicable)
- A business bank account
- Business phone number listed on 411
Your SSN is required for informational purposes only. You can give a $500 deposit instead of using a personal guarantee, if you have been in business less than a year.
Supply Works
Supply Works is a part of Home Depot. They offer facility maintenance supplies. It’s important to know that they do not accept virtual addresses, so you will need to use your home address if you do not have a brick and mortar location. They report to Experian.
To qualify, you need:
- To be in good standing with Secretary of State
- EIN number with IRS
- Business address (matching everywhere)
- D-U-N-S number
- Business License (if applicable)
- Business Bank account
- Trade/Bank references
- There is no minimal time in business requirement
Beyond Recommended Vendors for Business Credit: What’s Next
These vendors are great for getting started with building a business credit score. However, a good business credit specialist won’t stop there. They can guide you to a system that will help you through the business credit building process, from establishing your business credit profile to finding initial accounts, all the way through knowing which accounts to apply for next that you actually qualify to get.
For example, once you have your established business credit profile and have some initial accounts reporting, you may think you are done. Those reported payments start building your credit score, and all you have to do is keep paying. That’s not quite how it works.
First, there aren’t that many starter vendors out there. You are going to need credit from someone else eventually. But, applying for accounts before your business credit profile is ready for them wastes more time, more money, and causes more frustration.
For example, some retailers will extend revolving credit rather than net terms after you have 5 or more initial accounts reporting. Some need to see a longer and larger credit history. A business credit specialist can help you with a program to guide you in knowing which accounts you’re ready to apply for, and when.
How to Use Vendors for Business Credit Wisely
Here’s the thing, it’s not all about business credit when it comes to vendors. For a well rounded credit portfolio, you are going to need to use all vendor accounts wisely. You may need credit with a vendor that does not report. But, to get approval, you’ll need to have a strong business credit profile.
You also need to use all vendor credit wisely. When you are working toward building business credit, you are limited on which vendor accounts you can get approval for. Then, you are even further limited on which vendors will help you build your business credit score.
But do not make the mistake of thinking that means you need to buy things you don’t need because these are the only vendors you can get that will help your score. Rather, use these vendors to purchase general items all businesses need.
But, they most will offer fuel, office supplies, cleaning products and more. These are things all businesses can use.
Advanced Vendors
Building business credit is the goal, and starter vendors are a necessary part of that. Still, the end game is building and growing your business. A strong business credit profile is one tool to help you do that. It’s job is to help you get credit with any vendor you need, whether they report or not. We call these advanced vendors.
Consider this example. Imagine you need to buy inventory for your business. However, your cash flow isn’t yet where it needs to be. Using an inventory supplier that will extend net terms will allow you to purchase the inventory you need. You can pay the vendor after you sell the inventory. This is just one very general example, but you get the point.
Recommended Vendors for Business Credit Are Important, But So Are Other Vendors
Both types of vendors, reporting and non reporting, are necessary for building and running a strong business.
In fact, there are a lot of vendors out there that many do not even know offer business accounts. They can help your business grow and thrive, but you have to know they exist. This is another way a business credit expert can help you save a lot of time and frustration.
A good business credit specialist will help you access the vendors your business needs to grow. They can help you determine when you qualify for these vendors, and guide you in the right direction so that you reach the required qualifications as quickly as possible. Because when it comes to running your business and managing cash flow, there is no time to waste.
