# net-30 ways to see if store is credit worthy???



## tomstar (May 31, 2007)

I've been dealing with retail stores lately and currently only sell on cash payment, I dont do net-30/60. I was wondering if theres a credit check or a way to see if a store is "trustworthy" of net-30 and how to assure you are going to see your payment ie contracts?

Thanks

Tom


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## COEDS (Oct 4, 2006)

You can have a credit check ran on the company and the owners too. ..... JB


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## binki (Jul 16, 2006)

D&B do credit for businesses.


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## tomstar (May 31, 2007)

Is there any simple way to run a credit check on a buisness?


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## binki (Jul 16, 2006)

tomstar said:


> Is there any simple way to run a credit check on a buisness?


D&B- Dun & Bradstreet -Global Risk, Credit, Sales, Marketing, and Supplier Management Solutions


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## tomstar (May 31, 2007)

that seems pretty pricey.... thanks for the link though... is there any other way?


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## Girlzndollz (Oct 3, 2007)

You could ask their mom. Lol, just kidding. We used to use Dun & Bradstreet at my old job. May I ask why you would even consider Net 60? That is an awfully long time to wait for your money.

May I ask why you are considering changing how you do business, just curious. Is a customer asking you for "terms"? Is cash up front hampering your orders? If no, why fix what ain't broke. Being paid timely and as short as "right away" is awesome, and keeps you "liquid".

If you have customers asking for terms, an inexpensive way to help you decide if they are "worthy of it" is to ask them for three suppliers they have terms with, and then call those suppliers to find out how the customer pays.

It's not as solid as pulling a D&B report on a customer, but it is cheaper.


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## COEDS (Oct 4, 2006)

Girlzndollz said:


> You could ask their mom. Lol, just kidding. We used to use Dun & Bradstreet at my old job. May I ask why you would even consider Net 60? That is an awfully long time to wait for your money.
> 
> May I ask why you are considering changing how you do business, just curious. Is a customer asking you for "terms"? Is cash up front hampering your orders? If no, why fix what ain't broke. Being paid timely and as short as "right away" is awesome, and keeps you "liquid".
> 
> ...


I agree, That was sound advice to Kelly ...... JB


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## tomstar (May 31, 2007)

Just about every account we have opened has asked for net-30. They've been able to do cash but smaller numbers on cash orders. Net 30 would help expand us a bit and give us better options for local stores. I think ill try the 3 supplier idea it doesn't sound as concrete but seems good enough. I don't plan on even bringing up net-30 with a store that I think would be a sketch investment. 

1 more questions though. Is there any contract or something to that sort I would have a store sign stating that there obligated to pay after 30 days?


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## Girlzndollz (Oct 3, 2007)

Pay BY net 30, not AFTER. After net 30, they are LATE, and you can add a penalty if you wish.

For customer agreements, I am sure there are pre-written agreements on the net for you to use. Try looking at Legalzoom.com for something that fits your needs.

I supervised the AP and AR departments for a company a few years back. I can advise you to use a rock solid invoice and send a matching packing slip with your order. Your invoice should contain all the terms of the sale including: Date of invoice, details of the merchandise sold, payables terms (net 30) in your case, any special terms like a 2% discount if paid within 10 (if you add this, you don't need to), as well as any penalities that will be due for late payments (ex: 1 1/2% monthly interest for payments received at your location beginning on day 31. Again, you don't need to enforce this penaty, but if you list it, you can collect it if you want to. 

Second important factor that gets you paid is a POD. Proof of Delivery. If you have a signature from an employee at the customer location signing off that they received the merchadise on the packing slip, they are acknowledging they take possession of the shipment and are legally financially responsible for the payment of it.

If you hand deliver a shipment, get a sig on the packing slip, if you use a shipping service, either pay for a delivery confirmation like with the us post office, or use a carrier that supplies the info for you. 

If a customer refuses to pay by saying they never got the shipment, your POD saves you. Sometimes boxes do get delivered to the wrong address, and a POD will confirm that for you as well. Insurance from the carrier for lost deliveries is a good thing as well, for large orders, or all orders if that makes you more comfortable. 

These are a few safeguards you can instill to try to make sure you are paid -- in case of different scenerios.


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## Birdysboy (Jul 10, 2008)

Kelly's advice is good. Let me add some simple ideas as far as who to extend credit.

Ask for 3 Business credit references, company name, contact name, phone number. Call them personally and ask high credit, current credit and whether they are current. If your contact will not answer over the phone, ask them how can you get an answer. If you can't get an answer, go back to your customer and ask for another.

The reason you do 3 is you are looking for an average. For example, if 2 are late they you have a potentially late payer. Then you need to make a business decision to sell on credit or not. If 3 are late, I would wonder if I would be getting paid at all......

The high credit and current credit give you an idea of how well they have paid their bills in the past. If they are up to to their high credit and are also late, that sounds bad. If they are current and have virtually no credit out with them at this time, it might be good, but they might not be buying a whole lot of stuff from them right now and the reference they "didn't" give you might be well "strung out".

Start out small with them. I would say congratulations I have opened up you an account of $xyz. Pending satisfactory performance over the next () months, we will consider raising it to ().

Good luck


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## Birdysboy (Jul 10, 2008)

Sorry, just thought of this. Do you accept credit cards? You might consider that as an option. It is better to lose 3% than either lose the sale or not get paid.


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## Girlzndollz (Oct 3, 2007)

Great post, Ted. I think asking those Q's are worth the time and effort to evaluate a customer looking for terms. One thing I wonder is if everyone really understands what you mean by high and current credit. Maybe a quick example would go along way to help anyone who is even a little unsure be able to fully use the info you gave. 

Also, asking for 3 contacts helps ensure they have a few suppliers they are paying regularly. 

I am going to post some info now that may make a few folks nervous. When a company I worked for started to hit tough times, I was put in charge of maintaining what was called our "credit reference list". I had to make sure we had 5 suppliers that I paid within net 30, so we could use these references to open new accounts on terms. 

Sometimes we needed to source a new supplier for material they carried, other times we needed to change suppliers to try to get back on terms instead of COD for being Net 60 or 90 days. 

While I had to pick and choose who got paid out of the n60 and n90 suppliers, those 5 special companies were hand selected each week to be paid "current". For companies who pulled a D&B on us, they'd be clued in, but for those that checked references, no. It was a sham. 

Realize this is a potential risk with this method. That is why I said it was not a solid, but it is cheaper. It is not solid, it is cheaper, but only cheaper up front. If you fall into a situation like my old company would put you in, it is no longer cheaper... you will get beat. You "pay" for peace of mind when you buy a D&B. The cost may look pricey up front, but if you have a long term business relationship with someone who won't "beat" you out of your payment, a D&B becomes a small investment to avoid possible very big headaches later on. 

_Disclaimer: I'm not a bad person, lol, I didn't like what was happening, but this was also in the early 90's when unemployment was ramped and I wasn't interested in losing my job over "principles". I was eventually laid off, like 114 others in our 136 people company.  _


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## binki (Jul 16, 2006)

tomstar said:


> that seems pretty pricey.... thanks for the link though... is there any other way?


If your profit on the job is less than the dnb fee then just give them the credit. If it is more, determine how much you can loose and go with that. You could also get receivables insurance or tell your client you are not a bank and you don't extend credit or offer a lower price for payment in advance or on delivery. 

Another thing you can do is request a letter of credit from them. Then they will go to their bank and get it. That should ensure you will get paid. It works similar to an escrow account.


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## marcelolopez (Jul 16, 2007)

Girlzndollz said:


> _Disclaimer: I'm not a bad person, lol, I didn't like what was happening, but this was also in the early 90's when unemployment was ramped and I wasn't interested in losing my job over "principles". I was eventually laid off, like 114 others in our 136 people company.  _


Since that was in the 90's you might have rehabilitated yourself


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## sid (Oct 6, 2007)

For first order ask for a CC or check. Anything custom get at least a 50%. For non chain stores ask for a CC and make a deal to charge after their cycle date it will give them a minimum of 30 days to pay their bills some of our customers can get longer if they plan the ordering. If a customer demands 30 day terms we ask to keep a CC on file for security. After being in the gift business in the 70's the only trade references someone is going to give you is who they pay on on terms. Bank references are no good, Banks won't give you any info. As for chain stores, you must get a P.O. # or don;t ship. Double check everything on the P.O. front and back. If they fax a P.O. order get a copy of the back to see if there are any terms that relate to billing or shipping. Got burned big by the FDA about paying for freight on a huge order!, freight billing procedures were on the back of a P.O. that was faxed.


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## Birdysboy (Jul 10, 2008)

Ok, high credit would mean the highest level of unpaid bills at any one point in time and current would mean the amount they owe right now. 

High credit right now being the same as current credit is not necessarily a bad thing as a customer may be expanding and needs more stuff. Current credit may be zero also because the customer may just not be buying from them.


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