The business landscape has grown increasingly competitive – sellers must offer credit terms to gain an advantage over suppliers that operate strictly on a cash basis. Eventhough many have raised concerns, extending credit can often be a win-win for both suppliers and retailers.
Sellers that offer credit to customers allow for goods to be purchased without upfront payment – typically fulfilled within 30 to 60 days after delivery. Essentially, your customers are buying from you without paying for it first. The risk of customers not holding up their end of the bargain may be daunting, but it’s becoming necessary to sell on credit in the competitive market today.
More and more suppliers are starting to offer credit because it helps them retain customers and improve their loyalty. But your customers aren’t the only ones that gain advantages with credit. Higher spending power among customers also leads to more and larger purchases along with other perks for the suppliers.
Advantages of Credit Terms for Suppliers
Make More Sales
Suppliers that offer trade credit will likely see an increase in sales. Retailers are always looking to save more cash and by offering credit terms, you can gain an upper hand over other suppliers that only sell on cash.
However, offering trade credit alone is not the only way to increase sales. Suppliers can also include additional discounts for bulk purchases to incentivise their customers to buy more.
Win New Buyers
Offering credit terms is an excellent strategy to draw in more customers. This is especially true if your competitors are adamant about upfront payment. Retailers and small businesses prefer trade credit as they can maintain a healthy cash flow. With more cash in hand, retailers can cover more expenses and expand quicker.
Another factor that helps suppliers gain more customers is word of mouth. As retailers prefer to buy on credit, they are more likely to seek out a supplier once they learn that it offers credit terms.
Increase Customer Loyalty
Offering credit to retailers shows that you value your customers and have faith in their ability to pay their payments on time. Customers will continue to purchase from you because of your confidence as they will feel a certain amount of loyalty, and they want to conduct business with somebody they can trust.
Trade credit not only solidifies your relationship with your buyers – but also keeps them from shopping around for a new supplier. The mutual trust, clear communication, and profitable connection established through trade credit increase loyalty among your customers.
Gain a Competitive Edge
Small businesses have to be as conservative as they can with their cash. By extending flexible credit terms, you will instantly get a head start against your competitors that only accept cash upfront. Customers are more likely to choose to purchase on credit for greater control over cash flow and flexibility.
Aside from providing flexibility, credit shows customers that you care about their needs and are willing to offer solutions. By going the extra mile, businesses can retain customers and nurture relationships for future growth – a crucial strategy in the increasingly competitive and saturated market today.
Extend Credit Smoothly with Dropee
Selling on credit comes with its own risks. One of the biggest concerns that keep small businesses from offering credit is repayment. The risks of late payments, incomplete payments or customers not paying at all can be too big of a burden on businesses that are just starting out.
This is where Dropee can provide you with a safety net. Through Dropee Credit, suppliers can enjoy the perks of credit terms without footing the risks. By signing up as a supplier on Dropee, we will facilitate the credit terms on behalf of you and your customers.
How do you as a supplier benefit from Dropee Credit? Essentially, you can sell products to your customers on credit and still get paid upfront, while your customers need not pay until 60 days later.
Offer Credit to Your Customers Today
For many businesses, extending credit to customers is a way of securing growth. The key to managing the risks is to develop a solid credit policy with clear terms and to monitor them closely.
Want to nurture your relationships with customers and scale your business simultaneously? Click here to learn more about Dropee Credit.
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