Posts Tagged ‘line of credit’
Why Having a Small Business Credit Card Will Make Your Life Easier!
Friday, February 29th, 2008
If you’ve shied away from getting a business credit card because you think you don’t need one, that it costs too much, or that you don’t make enough purchases, then think again! Using a business credit can actually save you money and time - yes really! And for small business owners, those are your two most precious business commodities.
Advantages for having a credit card for your small business
Perks - With so many companies offering credit cards, there’s a lot of competition for your business. Today, credit cards are offering cash back, airline miles, hotel stays, merchandise and a slew of other hard-to-resist goodies - all free just for using a credit card instead of a check.
Less check writing - If you’re used to whipping out your business checkbook for everything from office supplies to purchase orders, why not make your life simpler and just write one check every month - to pay your business’ credit card bill!
Keeps business and personal finances separate - If you don’t own a business credit card, chances are you’ll end up using your personal credit card (for things like business lunches) and then have to pay yourself back with a business check. Talk about a hassle!
Getting additional names on a single account - What’s great about small business credit cards is that you can give key employees their own card, but everything’s still tracked on a single account. So, if Greg usually pays the purchase orders and Amy’s the one who "wines and dines" potential new customers, you can get them each a credit card under the business account. Expenses are easy to keep track of and it saves the time and hassles of expense reports and check writing.
Widely accepted - Back in the day, purchase orders were paid by check. But today, manufacturers and distributors welcome credit cards, as it’s an instant and secured payment. And, the more places you use your business credit card, the faster you earn those delightful perks!
Builds credit - Having a small business credit card (and paying the bills on time) can give a new business the opportunity to build a stellar credit history. In the future, this could be helpful if you need business capital in the form of a bank loan or line of credit.
Easy Itemization - Keeping track of your business expenditures come tax time can be nothing short of a nightmarish scavenger hunt - sifting through receipts, scouring through expense reports, etc. Most credit card companies will provide credit card holders with a year-end summary, itemizing and categorizing all the past year’s transactions. Now that makes life easy!
Having a small business credit card can make keeping track of expenses easy - not to mention the convenience and the rewards perks! It’s no wonder why over two thirds of small businesses use business credit cards! So, keep that bulky checkbook in the desk drawer and start using a small business credit card - once you start, you’ll wonder why you were so hesitant to get one!
Tags: Accounting, advice, Carrie Hinkel, credit cards, Finance, Finance and Accounting, line of credit, small business credit card
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Arranging Credit with Wholesale Suppliers
Thursday, November 15th, 2007
One of the key areas for any sized business is having a product or service to sell - after all, without this, where will you get your customers? This is why arranging credit with wholesale suppliers is so important, especially for smaller businesses. With credit in place, you can concentrate more on how best to service your customers, with the knowledge you have a line of credit with your wholesale suppliers for your goods.
Yet arranging credit with wholesale suppliers can be difficult if you’re unsure of the process or if this is your first start-up business. Thankfully, there are some simple steps you can follow, as well as more than one option available to you, to make the whole process easier and quicker when it comes to arranging credit with your wholesale suppliers.
Dealer Accounts
Depending on the nature of your business and how you would normally be paying your invoices, a dealer account is one way of arranging credit with wholesale suppliers. Much like a consumer would open a store card account at a retailer, a dealer account sees you open up a line of credit with the wholesaler in question.
This normally involves a credit check being run on your company, to ensure that you don’t pose a risk of non-payment. If you’re a sole trader, then the credit check will be carried out on you. This process can take up to two weeks to be completed, since it may also involve references being asked for as well. Once approved, you can set up your dealer account payment option. This can be by way of credit card, company check, or even cash.
Line of Credit
Another method of arranging credit with a wholesale supplier is through your bank, via a line of credit . Assuming that it’s been your bank that has approved your business idea in the first place and arranged the financing for it, they will obviously be keen to see you succeed - how else will they get their money back?
Therefore, use that approval to your advantage. A line of credit will provide you money for all the everyday expenses of running your business, and this includes paying your wholesalers. The benefit of this option is that it can be secured on your assets and inventory, so there’s less risk involved for the bank, making it more likely for them to open a line of credit to you.
Terms of Sale
One of the best ways of arranging credit with your wholesale supplier is by what’s known as a Term of Sale agreement. This is where they will provide you with your products or goods, and you usually have at least three months before payment is due. This is particularly useful if your business is a seasonal one.
Although making your small business is a challenge at any time, by arranging credit with wholesale suppliers you can at least worry about one less factor, and concentrate on making your business a continued success.
Tags: arranging credit, credit, danny brown, line of credit, Product Sourcing, small business, source, suppliers, wholesale, wholesale suppliers, working with vendors
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Getting a Line of Credit for Your Small Business
Wednesday, October 3rd, 2007
One of the buzz phrases that will often come up in small business dialogue is the business line of credit. This is basically an amount of money forwarded by a financial institution (usually a bank) which the business owner can use at her or his discretion for business expenditures.
There is usually a cap on how much the business owner can spend, such as $100,000, but any amount up to this can be used. In this article, we will take a look at some of the advantages and disadvantages of business lines of credit. Hopefully, you can use this information to decide whether or not a small business line of credit is a good option for your own business.
* A line of credit can be used to finance gaps. If you own a small business where your cash flow is likely to become tied up in accounts receivable or in inventory, then a line of credit will be handy until you receive the cash for your services or sell your goods. It is not uncommon for financial gaps to occur in a business year, and having the cash on hand to cover expenses in the meantime is always nice.
* Interest charges can add up! On the other hand, this money isn’t the same as if you had cash in hand, mainly because you are being charged for borrowing the money. These charges are in the form of interest, and the rate will depend on the financial institution you are using. These interest charges can really start to add up - so if you don’t need to use money from the line of credit, don’t. If you do, try to cover the cost of the interest, either through the price of your inventory items or by adding an interest charge of your own to your accounts receivable.
* Full disclosure is needed for the highest amount. It sometimes seems as though our world revolves around credit, and in order to be approved for more you have to prove that you make the money to cover it. If you prefer to keep your books closed to official eyes, it can be very hard to secure a line of credit. Small business owners do give up some of their business privacy with such a loan.
* All that money can be tempting. One of the biggest mistakes that small business owners make with a line of credit is to use the money to fund a project that will not be completed in a timely manner. As noted above, the interest rates on a line of credit add up quickly, and the last thing you need is to have a lot of extra charges incurred by having too much money out for too long. Keep your borrowing small, and don’t try to grow faster than your cash flow can keep up!
In short, a line of credit should only really be used when there is every chance that you will be able to pay back the money in the short term. If your cash flow is assured, a line of credit can help you cover gaps in the finances until the money arrives. I all other cases, a line of credit may end up costing you more than it can help.
Tags: advice, Finance, Finance and Accounting, Leeia Ladipoh, line of credit, money, small business, tips
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