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One of the easiest ways to start off on the right foot when it comes to business credit is to get net-30 accounts with companies that report to commercial credit agencies.
What is a Net-30 Account?
A net-30 account is one that extends you 30 days to pay the bill in full after you have purchased products. It’s vendor credit that allows you to buy now and pay later. Vendors that report those payments to commercial credit agencies help your company establish business credit.
Many entrepreneurs think that means getting a loan or line of credit. That help, but not all business owners will qualify for a business loan or line of credit, as those often require strong business and/or personal credit scores, and may require proof of business income.
So what other accounts are out there? Here’s a simple way to get started if your business is young, or your business isn’t making a lot of money yet: vendor credit. Vendor credit is when you purchase goods or services from vendors that allow you to buy now and pay later. Vendor credit is not just limited to net-30 accounts either—some vendors offer net-15 (15 days to pay), net-60, or even net-90 day terms. Make sure your business established properly.
Before You Open Net-30 Accounts…
Before you jump in and open accounts, we recommend you take a few essential steps to make sure your business is viewed as legitimate. If your business is not set up as its own legal entity (such as an LLC or S Corporation, for example), consider creating one. If you decide to operate as a sole proprietor, make sure your business is at least registered with your state’s Secretary of State. You’ll also want to make sure your business has a D-U-N-S number, used to identify it in commercial credit reporting agency Dun & Bradstreet’s database. And use a business email address on your account.
Where do you find these vendors? Below, we’ve provided three net-30 vendors that will make it easy to get started.
3 Net- 30 Vendors That Report to Business
Make sure you pay on time or early and you’ll have another credit-building account under your belt.
Similar to the other two vendors mentioned here, you don’t need to provide a Social Security number. Quill will verify your business address before extending terms. Again, most business owners who have properly set up their businesses should find it to be an easy process. Tips for SuccessThere are a few important caveats in this process. First, and this is important, you do not have to run up debt and pay interest to build business credit via net-30 vendors. Most vendors allow you to purchase items and pay them off in full by the due date to avoid interest. That’s perfectly acceptable when it comes to building business credit.
Tips for Success
There are a few important caveats in this process.
First, and this is important, you do not have to run up debt and pay interest to build business credit via net-30 vendors. Most vendors allow you to purchase items and pay them off in full by the due date to avoid interest. That’s perfectly acceptable when it comes to building business credit.