why it is essential that a business monitors the buying and selling of goods on credit?

2 Comments

1. tmore1 says:

   January 22, 2012 at 7:56 pm

   The monitoring of buying and selling n credit is one aspect of the business that i consider a ‘make or break’ a business. Why? Buying inventory on credit can be a source of business financing that has no interest rates hassle etc, so this can make your business.

   Selling on credit is not bad, because it will increase your sales volume, but only if your customers pay up. In case they delay you might be late to settle your debt with your supplier which is not desired. Remember you want a good relation with your supplier because s/he is an alternative source of funding.

   Now let me dig deeper why selling on credit is not always a maker…. So that you business is able to settle bills, payroll etc you need your cash in-flow to be higher than your cash out-flow. That is your current assets should be sufficient to cover your current liabilities otherwise your company is risking insolvency.

   So to rap up things;
   - Check your cash in-flow and out-flow
   - Buy in credit (only if you are sure to pay up)
   - Take advantage of cash discounts when you buy on credit (10/30)
   - Penalize you customers for paying up late
   - Build a cash reserve for in case you run out of working capital.

   And finally check out this concepts: Working capital, cash flow, Networking capital, you can find information at http://www.answers.com

   There is more to all this …
   grts
   tmore
2. Initial Underwriting Group says:

   January 22, 2012 at 7:56 pm

   A true business credit card is a line of credit that is taken in the name of the business, under the business’ credit. Activity, whether good or bad, is reflected on your business’ credit report through D&B and other financial institutions, and the liability for any debts incurred and bills owed is with the business.However, some companies out there offer "business" credit cards which they require a person guarantee for. These institutions will often ask for a personal guarantee, and will almost always ask for a social security number from the person applying for the card. If this is the case, the credit card is not a business credit card, but is simply a personal credit card which is used for the business. The business is not liable for bills and debts – you are.When applying for a credit card for your business, watch out for areas asking for your SSN (and not your TaxID or EIN) and be wary of any credit card that asks for a personal guarantee. By ensuring that your credit card is in the name of your business, you can help to build your business’ credit, while avoiding creating problems with your own.

   Many companies offer a list of credit cards that are issued under the business name only. Those lists typically run $300-$900, depending on the quality of the information inquiring. I would suggest starting your search online via google or yahoo. Search for "strong business credit" (just like that in quotes) to find services that sell the information.

   Good luck,

   Ilya Bodner

   Small Business Owner

   Initial Underwriting Group