5 Things You Should Know About Trade References
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You may want to consider reporting your customer’s payment experience to commercial credit bureaus such as Dun & Bradstreet, Equifax or Experian, and/or to the Small Business Financial Exchange. Let your customers know you report to business credit; that’s an incentive for them to pay on time. Trade references can benefit your business in terms of getting credit, but they can also help your business in terms of extending credit and getting paid on time. If your business is going to provide goods or services without being paid in full up front, you are extending credit. As a result, you may be asked to provide trade references for your customers. It helps your customers and it helps other businesses ensure they aren’t taking unnecessary risk when extending credit.
A description of the reference man is contained in the International Commission on Radiological Protection report, ICRP Publication 23, “Report of the Task Group on Reference Man.” Customers should be aware of this if they wish to use one of these identifiers as a UTRF on transaction reports submitted via a reporting ARM where there may be restrictions to the character set supported. If an FCM Clearing Member requests amendment to several trades it must provide to the Clearing House an electronic text file containing all the relevant details required by the Trade Reference Amendment Request Form.
Establishing trade references is a must for any business that buys on credit or will be applying for a loan. Building up your trade references is not difficult, and, with a little planning, you can be sure you’ll get the most out of your references. This score is strictly for businesses, but it is similar to your personal FICO credit score. A score above 70 is good, with over 80 being a very low credit risk, resulting in some of the most favorable credit terms. However, consistently paying on time will speak volumes to your credibility and will carry a lot of weight. At some point, you might miss a payment due to something outside of your control.
Trade involves the exchange of goods or services for money or other items of value. A trade reference typically refers to such exchanges between businesses. Primary trade references include payment for parts, supplies and materials, but they might also involve advertising, printing, graphic design, software development and direct mail service. Consultants, decorators, attorneys and accountants generally constitute secondary trade references, as do cleaning, computer repair and collection services. Other secondary references might involve those involved in your business car leases, post office boxes or furniture rental. Without a trade reference, the supplier could not take the risk by allowing you credit.
Even small corporations leave a financial trail behind them as they conduct business. Annual reports provide public records, and customers and suppliers all provide information to organizations such as Dun and Bradstreet to assemble a picture of your company, or Paydex score, for potential creditors. Since lenders require — and check — trade references, it benefits you to report acceptable references with which you are in good standing.