Good supplier credit lets you buy materials before you get paid.
In this article
Applications
Complete and accurate.
Guarantees
Understand them.
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Limits
Match your volume.
Lien rights
Suppliers have them.
Terms
Pay on time.
A closer look
Contractors often sign credit applications quickly at the counter. Those documents can include personal guarantees, interest charges and attorney fees. Reading them protects the owner.
Where to start
Review all current supplier credit agreements.
An example
A contractor negotiated a higher credit limit after a year of on-time payments, easing cash flow on bigger jobs.
Common mistakes
Signing without reading, exceeding limits and paying late.
What to track
Track limits, balances and days to pay.
Questions to ask
What did we guarantee? Are limits enough? Are we paying within terms?
Who owns it
The owner or controller should sign credit agreements, not field staff. One person tracks limits and payment terms so purchases do not stop at a critical moment.
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Frequently asked questions
Should contractors sign personal guarantees for supplier credit?
Many suppliers require them, especially for newer companies. Understand the risk and negotiate limits or removal as the company grows.