By by Lydia Gitari
Trade credit, or an agreement that you can purchase goods or services from a firm and pay at a later date, is a normal process in B2B transactions. It’s an effective tool to encourage sales and stimulate business growth.
Yet there are risk associated with determining firms credit worthiness before borrowing.
There are several ways of identifying a good credit firm.
- Character – it is important to know more about the background and character of your business partner, know about their mode of lending and recovery, how do they deal with their customers. Let them tell you about how they can help you in period of business depression, for example can they do restructure.
- Processing fee and other changes-credit firms have different processing fees, ledger fees and insurance fees. It is advisable to go for cheaper service provider.
- Interest- Always ensure that you look for an affordable interest. And check if it’s per month or per annum, for example they can provide a 13% per annum and another one 10% per month. The one providing per annum is cheaper.
- Need-Loan products are tailored according to customers needs. Choose a loan that suits your needs, don’t just take a loan.
Ensure you conduct a through research on the firm you want to take a loan with. Do not take a loan with haste, take your time in finding a firm that suits.
