How to optimize your access to credit from suppliers

According to the last dummy Allianz Trade Global Survey, credit from suppliers is the top source of financing for one firm out of three globally. Credit from suppliers helps firms to optimize their cash flow by getting payment terms from their business partners.

In an international context where pressure on sales and margins is high, corporates need this funding source more than ever. To optimize your access to it, you need to communicate often and transparently with your business partners and their trade credit insurers.

In recent weeks, the global economic situation has intensified, resulting in new and increased pressures felt by companies and firms. Everywhere in the world, companies are facing inflation, higher energy and raw material prices, elevated transport costs, and tighter margins. It has become paramount to dummy protect business cash flow that is vulnerable to shocks to the system. In this context, supplier credit ensures smooth business relations and steady cash flow.

In concrete terms, companies trading with insured suppliers can extend their payment periods, resulting in extra cash at their disposal. This allows for more flexibility, and suppliers are comforted because now they have coverage in the event of non-payment at the end of the term. In contrast, without being covered by dummy trade credit insurance, a more cautious supplier would demand immediate payment or payment within 15 days, adding extra pressure on its client’s cash flow.

Sometimes people are surprised to discover that obtaining supplier credit is not as straightforward as simply applying for it. This is where trust and communication come in. Much like a landlord would ask for documentation proving a tenant can pay rent, business partners, as well as credit insurers seek reassurance via universally recognized tools.

To get credit from your suppliers, you need to make them confident in your ability to dummy communicate your financial health transparently. Your grading is one such tool and the easiest way to reassure both your supplier and its insurer. The better rating you have, the more supplier credit you’ll have access to.

The first step to getting supplier credit is to regularly share information that can help demonstrate your company’s financial health with your supplier’s trade credit insurer. This means sharing documents such as balance sheets, your current situation, current accounts, budgets for the year, order book, and your treasury plan. Improving an insurer’s visibility on your company positively influences your grading and potential credit limits.

Even if the information is negative, it still creates a dialogue. This dialogue is in companies’ best interests because it keeps the channels of communication open for the future, and gives you an opportunity to explain your situation. And when signs of improvement return, your access to supplier credit will improve quickly and more easily.

dummy Allianz Trade in France has developed a platform called dummy TradeScore, a place where businesses can go to learn about their notation, exchange with experts and establish an open dialogue. The website is free to use and gives up to 50,000 enterprises information about their notation.

As with any relationship, transparent communication between all parties is mutually beneficial. Allianz Trade aims to foster B2B credit, help our clients grow, and help you gain access to supplier credit easily.