The Wholesale Forums

[dragon8099]

Hi everyone,

Just after a bit of advice on trading accounts with suppliers.I,m running as a Ltd company already,but have no trading experience.I wish to apply for a trading account with a supplier,but on the application forms there is a section where you have to have proof of trading experience or trading references.I have niether and am just wondering how you get past this obstacle.

Scott

[sabrads]

How long has your limited company been up and running ?

You could contact them and explain the situation and provide your accountants details - past that you might have to buy orders from them cash up front till you prove a trading history with them.

[dragon8099]

Been running 12 months now.I will make some inquireies and see what they have to say.
Thanks

[consultant]

do you have a business bank account? Also, company registratio info should help!

[dragon8099]

Yes i have business account and vat registered.I just wasn't sure if filling the application form for a trading account would get accepted without the relevant trading experience.

[hardwareheroes]

Just tell them the truth - that you are a dormant company - or have been trading at low levels. They will probably still give you an account but will require cash with order/on delivery for the first three to six months until you establish your trading history with them.

Whatever you do, don't bounce a cheque during this "probationary" period.

[J Smith]

Let’s see what kind of textbook waffle I can throw into the mix here.

From my cash management and credit control studies:
In the case that a supplier is asking for trade references they are referring to other suppliers who you already have dealings with. Normally this will be a case of giving out the name of the business, along with a possible contact number, and possibly your reference number so they know which customer to give a reference for. They will most probably contact them directly as opposed to through you. Some of the questions they may ask your referees (might not be correct word) will relate to your credit terms (amount and no of days credit provided), length of time as a customer, if you normally pay on time (if on credit), and any additional information.

However I imagine that if this is your first supplier they must have other systems in place. Therefore if you just let them know that (as stated above in post by hardwareheroes) you are just starting up they may still trade with you, but likely without any credit terms.

Separate to that I am just wondering why you are registered for VAT?
Have you taken over another business, and therefore you are in the VAT limit, or is this a new (set up 12 months ago) business?
Or is there a specific reason for being VAT registered if dealing with certain suppliers?
I am unsure on the specifics of overseas trading and the rules and regulations that apply.

However if you are just starting up and do not expect to break the VAT threshold then it may be advisable to deregister for VAT.

What is your take on this hardwareheroes (assuming you’re the person who said you have done your ACCA in my introduction post)?

[hardwareheroes]

It may be beneficial to be VAT registered if he is trading with EU partners and there are still some UK distros who will insist on a VAT number before trading with someone.

However, if there is no specific reason to be vat registered, one would be financially better of de-registering until turnover reached the necessary threshhold.

[dragon8099]

Just to clear up the VAT issue.I am currently a self-employed driver on the flat rate scheme and it benefits me financially.I'm basically looking at a second income,but really have limited experience with trading.I know its all trial and error,but I'm willing to give it a go.Many thanks to the both of you for your advice.

[J Smith]

Another quick question:

Will you be using your current "business" as a self-employed driver for your trading as well?
Or will you be setting up a new / have set up a new Ltd company, specifically for your new trade?

I am unsure if your current business and your new business will both apply for the same flat rate, and if not what flat rate scheme might be available to you, or if potentially you will need to use the normal method with regards to VAT.

Also of note a little, if your new and current business are one and the same, it might be advisable (check with hardwareheroes) to set up a separate Ltd company, therefore restricting any potential losses (e.g. liquidation - worst case scenario) to just the one business.

Again off note, if the businesses are separate to each other, then i am unsure if one VAT number can cover both of them, therefore your new business may not be in effect VAT registered.

I recommend that you check this with hardwareheroes as he is more than likely more knowledgeable than we in this field. Or if your self-employed business has an accountant, to check it through with them.