You’ll need to open accounts with manufacturers and distributors to acquire the products you want to resell. Or, if you’re manufacturing yourself, you need raw materials and other items. Even if you’re going to open a service business, you’ll need some supplies and office equipment.
Most businesses purchase these items and products on credit and pay in 30 days to conserve cash and use their resources effectively. But starting a new business raises a red flag because many suppliers have lost money on new businesses that closed quickly and never paid their invoices. So when you’re opening new accounts, be prepared to pay something in advance for your first few orders or to make a preorder cash deposit. This will ease as time goes on and you establish a favorable track record. You will get a small credit limit, and it will gradually increase the longer you are in business and pay on time.
One way to use credit and still satisfy the supplier is to apply for company credit cards. This will give you 25 to 30 days of free credit if you pay your balance in full. Some company cards will even give you a small cash reward or allow you to earn miles for free travel. Keep in touch with your suppliers and don’t be afraid to inform them of slow times or if you will be a little late on any payment. And if you can’t pay in full, a partial payment will buy a little more time. Straightforward honesty will keep your account in good graces. Remember, you need them as much as they need
you, and long-term relationships will always help your business grow.