Making Sure You Can Capitalize on Your Vendors

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- by Todd Jensen

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If your vendors don’t have enough capital to stay in
business, your business can’t capitalize on them.
Making sure that your subcontractors, suppliers and
vendors have good credit standings and enough credit to
remain in business provides a degree of certainty that
they’ll be able to deliver services or goods that you
need.

Remember, they are a critical link in your supply chain
and your ability to deliver what your customers want
and need.

Do a Credit Check When Necessary

Before you begin a major project, order or expansion,
decide whether a credit check is necessary. Can you
easily switch or substitute the vendor? What kind of
history do you have with the vendor? If finding another
vendor is difficult or if you’re unsure about a new
vendor, take the time to do a credit check.

Online Resources for Credit Checks

Dun & Bradstreet is a solid source of credit
information on companies. Basic information from the
website (http://sbs.dnb.com) is free. For more
comprehensive information to more than 13 million
companies, you can pay a fee.

You may also want to check with one of the major credit
reporting agencies, such as Equifax (www.equifax.com),
Experían (www.experian.com) or TransUnion
(www.transunion.com).

Commercial Code Reports

For companies in the United States, check with the
Secretary of State’s office for the vendor’s particular
state. The office may have a uniform commercial code
report on your vendor. These reports are filed when a
company is a high credit risk. The report will let you
know whether creditors have claims on the vendor’s
inventory or assets.

Vendor Payment History

Another safeguard is to check the vendor’s payment
histories with its suppliers. Ask the supplier for
references and check them. If possible, visit your
vendor’s facility to get a sense of how the business is
run.

Financial Statements

One of the best security measures is to ask for a copy
of the vendor’s financial statements or a letter from
the vendor’s banking institution. This will give you
the best sense of their standing and available credit.

This article brought to you by Todd Jensen, a member
of the Principa Alliance.

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Todd Jensen, “The Profit Engineer”, has helped hundreds of
business owners make their business more successful and
profitable. For tips and strategies on how to boost your
business success as well as increase your profits, visit
http://www.theprofitengineer.com or
http://www.maxqtc.com
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