Extend the Olive Branch by Extending Credit Terms

Tuesday February 23, 2010 | Filed under:

We all know the recession has wreaked havoc on the industry and made daily business a struggle, but it's also affected the way suppliers and distributors relate to one another. 

Any time a company's bottom line is affected, it can cause unwelcome practices like dried up credit terms. Distributors left high and dry must either pony-up payment beforehand or put down a credit card. 

Sure it makes sense to ask a distributor with poor credit or new to the industry to pay up-front, but what about all those distributors with an excellent credit score?  Suppliers should ask themselves whether or not they can really not afford to help a distributor sell.

Recently, ASI surveyed a sample of distributors to see how industry credit and credit terms were affecting their business.  A majority of respondents were owners or primary contacts at their company, and 74% said getting good credit terms is a vital part of staying viable and competitive in the marketplace. 

Distributors spoke out loud and clear.  "Even with a very good credit rating, it is almost impossible to get terms for more than $10,000 - and usually lower amounts with suppliers with whom you haven't done business with recently," said one. "You're penalized for not doing consistent business with them.  It's very tough to work without decent credit terms." 

Remember, distributors are our industry's salespeople and suppliers provide the industry's products.  At a time when we rely on each another more than ever to grow, I'd ask suppliers to look long and hard at who they turn down when choosing not to extend terms.  It may make more sense to preserve fragile relationships, by offering a proverbial olive branch or line of credit to those who are worthy. 

It's easier to maintain a good relationship than it is to go out and make a new one.

Suppliers can click here to learn more about checking distributor credit scores through CreditConnect.  If you don't use CreditConnect, try using another industry service so you can find out what a distributor's credit score is.

Distributors can learn more about their industry credit score by sending a message to customerservice@asicentral.com.

- Gene

Gene Rahill is sales director of ASICreditConnect - reach him here.