I recently discussed payment terms with a new vendor and was told my company’s credit rating was good. I didn’t know my company had a credit rating. What is it?
A company’s credit rating is based on its “trade” credit track record. Trade credit is the credit extended by vendors and suppliers when they give their business customers time to pay for current purchases. Credit periods of 30 days and 60 days are common. Trade credit is the largest source of business financing in the U.S. Your company’s credit rating is similar to your personal credit score: A good rating makes it easier to borrow money — and that can make or break a small business in a tight lending environment.