Credit And Trade References
I have received an application for a credit account from the above named company. Therefore, I would be grateful if you could answer the following questions. This measures the highest balance the customer had outstanding during a 12-month period with the vendor. For example, a customer has $10,000 of credit with a vendor. Most of the time, their outstanding balance ranges from $3,000-$5,000.
Remember, for a creditor to become a trade reference on your credit report, it must manually submit your payment history to the credit bureaus. Trade references can benefit your business in terms of getting credit, but they can also help your business in terms of extending credit and getting paid on time. If your business is going to provide goods or services without being paid in full up front, you are extending credit. As a result, you may be asked to provide trade references for your customers.
One method is to pay for a business credit scores report and another is to check the trade references. The trade references are typically collected in a credit application form. Some vendors are willing to accept trade reference letters or will do a verbal verification with your existing suppliers if your business credit scores are not strong.
They can play an extremely important role in protecting your business from unnecessary risk while allowing you to reap the benefits of selling to the right customers on credit. One good indicator of the difference between a good and bad trade reference is where it is coming from. If the company is able to provide a reference from within the same industry, that is a good indicator of how quickly you will get paid. If they are providing a reference from outside the industry, such as their electric company, it may not be as indicative of their payment history, since you must pay the electric bill to keep it on. These of course are not the only types of companies that can be a valuable reference, below are a few other example of both good and bad sources of information. When a business pulls your D&B credit report, it can simply view your PAYDEX score for a quick evaluation of your creditworthiness.
Of course, other factors, such as your business’s performance, also determine your access to credit. Dun & Bradstreet (D&B) is similar to a credit bureau for businesses. When an entity such as a bank, vendor, customer, or insurance company wants to check a business’ credit, D&B is a great way to do it.