You’re trying to get a new account setup with a supplier and they’ve asked you for some credit references, what should you do?

The time to take care of it is before you’re in the heat of battle and need the credit references. Ideally, you have them lined up ahead of time.

The first step is to have a credit history built up with several suppliers. Develop a history of paying them on time and being consistent in your payment patterns. Hopefully, too, they’ll be both number transactions and total dollars that have some meat behind them, so it means much more. A credit references where there’s only been a couple of purchases for fairly small dollar amounts is pretty weak.

If it’s somewhere that is a recognizable name, that’s all the better. That company could have instant credibility with your particular supplier.

Even better, can be somebody from the same industry as the supplier you’re trying to get the new account from or from a related industry. The closer it is to home for that supplier, the better.

Now, when you give out the credit references, make sure you’ve cleared them with your references in the first place. You don’t want to blindside your references and catch them by surprise. That could damage a relationship that otherwise might have been going pretty well.

What if your cash is tight? It’s still important to try to build up your credit references with a select number of accounts. See if there’s a way to make your cash flow work where you’re paying a few of these accounts on preferential terms.

Remember too to check your credit reports and see what’s out there. You want them just like there is on the person credit side, you want to know if there’s any skeletons in the closet that are being reported there that you’ll have to answer about. It could be that there’s some erroneous information out there and you can address that, rather than getting hit blindside and having to do some explanation later.

These are some thoughts on how to handle the credit references. Like in many things, the more you can put on ahead into this, the better off you really are. Follow some of these steps and you’ll be on the way to having some better credit references to give to your supplier and to have enough credit references that you can rotate them around and not have to rely on the same two or three every time.