an average of between 12 and 17 per cent of total
assets – that’s a huge percentage of a company’s
overall capitalisation! Additionally, globally, an
average of 20 percent of all externally fi nanced
corporate investment is done through trade credit.
If you are missing out on this component, you
are operating at four-fi fths the power as a business,
when compared to your competition that is utilising
such credit. Th e magic of doing business on terms
is that it can potentially allow you to cycle your
inventory for profi t before you have to pay for it!
All retailers know that turns are their best friend.
What if you could fi nance an entire inventory turn
(or multiple turns) with no interest? Most trade
partners will extend even a modestly established
business 30-day payment terms. As relationships
grow, these terms can grow out to as long as six
months. Additionally, these relationships often come
with early payment discounts that you can avail
yourself of if you are in a cash-rich position.
If you are in fi rearms retail, terms with your
distributors can be a particularly powerful tool.
Many off er terms as long as 90 days interest-free.
Th is is a service to you, as they are doing the hard
work of establishing credit on their end with
banking institutions to fi nance those terms. Accept
the favour and let the timing work toward your
Th e longer and more successfully you conduct
business on trade terms, the stronger and more
diverse your trade references become, further
building your business credit rating and making
access to credit much easier in the future should you
3. CAREFULLY CHOOSE AND USE A BUSINESS CREDIT
Th ere is no shortage of fi nancial products out there
that promise to help businesses with cash fl ow, but
there are also no magic bullets. For a small business,
choosing the right product among the sea of options
can leave business owners feeling like Goldilocks
before she found baby bear’s bed: some are too big,
some are too small and none feel “just right.”
Th ere are many considerations that go into
choosing the right card program for your business,
Th at’s another article in and of itself, so, for the
purposes of this discussion, the two most important
criteria are rewards and the type of account.
Rewards are very important and can add up
signifi cantly over time. Card account rewards can
range from 1 to 5 per cent depending and can take
the form of cash back or accumulating points that
can be redeemed for goods or statement credits.
Either way, they add up and can be extremely useful
in fi nancing purchases, travel or even just a credit
toward your bill. If you spend $250,000 annually on
a business credit card account, that could leave you
with $2,500 to $12,500 in rewards to use next year,
no small contribution.
Th e type of account also matters. You will need to
fi nd a card that will be in the name of your business,
thereby building a credit history for your business
separate from the individuals who own and operate
it. In many cases for a small business, a business card
account may also require a personal guarantee from
an owner. Th is is perfectly fi ne, but be careful (ask
customer service!) and ensure that any card you sign
up for will list the EIN of the business, not just the
SSN of the guarantor.
A good business credit card account can provide
additional cash fl ow (via the rewards or cash-back
programs), allow you additional time to fi nance
and manage expenses (even just by virtue of the
statement cycle if no balance is carried) and build
credit for your business.
About the Author
Josh Fiorini is the former CEO of PTR Industries Inc.,
and spent the fi rst decade of his career in fi nance holding
positions as an equity analyst and portfolio manager
before starting his own hedge fund that led him to the
fi rearms industry. Th is experience, along with a deep
background in manufacturing, banking and private
equity has made him a sought-after contributor on
numerous boards and discussion groups on political and
Currently, Fiorini invests his time and resources into
non-profi t initiatives and acts as a contributor and
management consultant to various fi rms in the fi rearms
industry. His activities have been reported in such
publications as Th e Wall Street Journal, Th e New York
Times and USA Today.
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