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The Business Of Trade Credit
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Many small and medium-sized businesses with a limited cash flow use trade credit to obtain office supplies, storage units and other essential items needed for business operations. Trade credit is the scenario whereby suppliers let business owners buy something now and pay for it later, i.e. buying on account with no cash changing hands at purchase.
Unlike cash credit which simply provides a loan or line of credit to the business, trade credit allows the take-away of tangible items that a business needs to function.
Sometimes the supplier will offer a price discount if the payment is made within 30 days or some other agreed-upon time period. On the flip side, interest can be charged for late payments. What's more, today's economy has led many suppliers to request a personal guarantee from the business owner, even if they have paid their trade credit accounts regularly and on time.
A personal guarantee, sometimes called a commercial guarantee, is a legal contract that puts forth specific obligations on the part of the business to the lender or supplier providing trade credit. In short, the business owner agrees that the supplier can recoup defaulted payments from the personal assets of the business owners.
Some business owners have come to believe that solid trade credit is an important and necessary part of qualifying for cash credit, but this is a myth. While good trade credit can help a company run day-to-day operations, it has little to no effect whatsoever when applying for cash funding. They are completely separate entities.
So while trade credit can be an important and useful tool, businesses owners must understand exactly what it can and cannot do for their overall business plans and goals, including future cash funding.
From trade credit to capital acquisition, Integrity Business Funding knows how various funding options can help your business. Visit our website to learn more or schedule an appointment with one of our expert Certified Funding Strategists to discuss your specific needs.
If you're starting a new business, growing an existing business, or funding your investment portfolio, Integrity Business Funding has both immediate and long-term cash acquisition solutions.
Our distinctive combination of online education and personalized coaching can be tailored to your specific situation and help you acquire unsecured business lines of credit in as little as 45 days, even with less than stellar credit.
For More Information Please Visit http://www.integritybusinessfunding.com/
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