What To Expect When A Opening Credit Account with a Plant Hire Company
It is completely normal that if you are a trading business in the UK; you are going to want to open a credit account with suppliers you can trust to deliver. However, it is not uncommon that people to experience difficulties when trying to initially set a credit account up. This is why we have put together this in-depth resource on opening a credit account with a plant hire company.
By the end of this resource, you will have everything you need to open a credit account with a plant hire supplier. To start, let’s have a look into what a trade account actually is.
What is a credit account?
Credit accounts provide businesses financial credit, which must be paid in a particular amount of time. In other words, take the goods now and pay later. This method of business operation is a great way to free up cash flow.
These agreements are made prior to the goods being supplied. Depending on the plant hire company you are dealing with repayment terms are 30, 60 and 90 days. However, it is worth noting that not all supplier’s terms and conditions are the same. Always be sure to read the fine print.
This type of produce acquisition is available in almost every aspect of commercial purchasing, no matter the business. So, now that we know what trade accounts are, it’s worth knowing all the benefits that come with having one for your business. Especially for plant hire.
Pros to having a credit account with a plant hire company?
Credit accounts are the most popular way of purchasing anything for your business. Why? These types of accounts allow you to purchase the things you need on credit. Somewhat like a credit card. Buy now and pay later. The ability to use this facility with plant hire equipment can have several financial benefits to assist any size of business.
Help get starting up
Whether you are just starting out or an established business, a credit account will enable you to get the equipment you need, fast. This avoids you from having to take out loans from banks to cover the cost of equipment.
No upfront cost
When trying to get hold of plant hire equipment you will normally face with two common options. Open a credit account or operate as a cash customer. Unlike credit account holders, cash customers require to pay an upfront cost as a security deposit for machinery prior to obtaining it. Choosing to open a credit account gives far more flexibility.
Easy to arrange
Credit accounts are extremely easy a quick to open with your supplier. We will cover later in this resource the complete process of how to open one.
Discounts on long-term hires
Loyal credit account holders have access to better rates if they hire equipment for longer periods and keep up their repayments as agreed. These small margins can, in turn, can allow credit customers the upper edge when quoting for projects.
Builds credit history
If your business has never had a credit history before, then using a credit account is a great way to start. Unlike paying a bank, these types of accounts are generally interest-free (supplier dependant). It is also not uncommon for discounts to recieve discounts for early repayments.
It is important to build a business reputation to find new clients to work or trade with. Therefore, with a credit account you can easily build your business reputation with a plant hire supplier. It is very common that a business can gather referrals from remaining a loyal trade account holder.
Cons to having a credit account with a plant hire company
Even though there are many pros to having a credit account, you need to be aware of the potential cons that could affect you and your business. In other words, being aware of these will allow you to foresee any potential hurdles that may come in your way by operating one. It’s best to always know what you are getting yourself into beforehand.
Problems opening an account for new businesses
Opening a new credit business account for brand-new businesses can sometimes be difficult. Especially if a business has little credit history, the plant hire supplier must make a judgement on the amount of credit they offer the customer. If you find a supplier that you like working with, speak to them to see how you can raise your credit limit with them. Above all, most plant hire suppliers are happy to work with clients to help them get the equipment they need. In time, your credit limit will rise over time of providing payments are made.
Additional charges (Late payments)
It is not unheard of to be charged a late payment penalty fee for failing to meet contract terms and conditions. Therefore, before opening any credit account, be sure that you know what your payment terms are. Even though you can treat the credit account as an interest-free loan, you do need to make the agreed payments. Most payment terms are 30, 60 or 90 days.
Failing to make payments on equipment will result in legal action. This could lead to enforcement action taking place, such as seizing assets of your business. Overall, this could be devastating for you and your credit history moving forward.
Loss of suppliers
Failure to meet the terms of the credit account agreement could result in suppliers refusing to work with you.
How to open a credit account?
Opening a credit account is very easy and quick to do so. It requires you to complete a form that includes information about you, your business, references, and a credit limit you wish to apply for.
This form takes around 5 minutes to complete and is available from your supplier direct. For example, some applications can be downloaded online or collected in-store. However, it is essential that you read the terms and conditions of your proposed prospect. This ensures the suppliers are suitable for your needs. Nevertheless, if you are ever unsure of any aspect of opening a trade account, you should speak to the business you are dealing with.
Limitations of trade accounts?
The amount of credit history you have will directly affect your credit offer. The more evidence of repayments, the higher the credit limit the supplier may offer you. If you surpass your credit limit, you will not be able to obtain any more equipment until you clear the account.
This could have a massive effect on your operations if you are unable to do so. Credit account holders receive monthly and annual statements of their accounts. If you are regularly reaching your limit speak to your supplier to see how they can raise it for you. The more trust you build with a supplier the more likely they will extend your account limitations.
All limitations can are in the terms and conditions of the credit account agreements you will need to sign.
Things you need to open a credit account?
There are some very essential things you need to open a credit account with a plant hire company. These are as follows:
Passport or driving licence
A passport and driving licence is used to identify the person opening the account. A copy of this information will be taken and documented.
Utility bill/proof of address
A utility bill is used a prove the address of where your account is going to be charged. Utility bills can include:
· Bank statement
· Gas/electric bill
· Council tax bill
· Broadband bill
· Water bill
· Insurance documents
· Phone bill
All of these forms of address proof MUST be less than 3 months old. Utility bills older than 3 months are not accepted as a legal form of identity.
Ensure you have all your business information when opening a credit account. This will include company registration numbers, VAT numbers, formation dates etc. This crucial information will be used to identify your business, where it resides and assists in credit checks.
Credit accounts also require references from other businesses to open. If you do not have any references (because you are a new business) you should speak to the supplier prior to opening your account.
For you to successfully open a credit account you will need a copy of all your bank account details. This will include your sort code, account number and bank full address.
Credit limit request
When opening an account, you should have an idea of the credit you are going to apply for. This credit will consist of all the purchases you will make during a period. Depending on your demand and equipment hire cost will determine your credit limit. Note that even though you apply for a credit limit, doesn’t mean you will be automatically given the exact amount you wish for. This is ultimately down to the credit check the plant hire supplier will do on you.
How long it takes to open a credit account?
Once you complete your account form and copies of your documentation have been taken, a credit check is completed. Credit checks are completed by the supplier’s accounts department and use an independent system to determine the risk.
To complete a credit check and open a trade account can take up to 24hrs to complete. Therefore, it is always best to give yourself enough time for your application to properly process. However, if you urgently need equipment, you should speak directly to the plant hire company.
Credit account forms for WHC Hire Services
WHC Hire Services is proud to of helped thousands of businesses grow over the last 25 years with the use of a credit account. Our high-performance world-class service is available to all UK businesses nationwide. Click here to download a copy of our credit account welcome pack or call 01684377977 today to discuss your business requirements.