When is the Best Time to Pay for Materials? Should I Try to Take Advantage of Discounts and the Best Price?

Wondering when the best time to pay for your materials might be? When it comes to paying for materials, the optimal solution depends on the project modeling, needs of the project, and the cash flow requirements.  It also depends on how long it takes to secure the material and how readily available it is.  If there is a way to save money by paying the supplier early AND you have excess cash flow, then take advantage of that.  However, if you don’t have the extra cash, you should pay the supplier no later than when you are paid for the project (during which the materials were used).  This will ensure you do not get out of balance between your Accounts Payable and Accounts Receivables.  Ideally, you are using a Project Cash Flow model to determine the answers to these kinds of questions.

• What financial documents are typically needed to obtain a project/contract loan? 
• Is my personal credit score required?

In order to demonstrate your ability to pay, you will want to get your financial reports in order.  Here are the ones to focus on:

• 2 years of business tax returns
• 6 months of bank statements for all business accounts
• 2 years of internal financial reports (income statement and balance sheet)
• Current debt schedule 
• Current Accounts Receivable (AR) and Accounts Payable (AP) reports.  

Most lenders will ask you to complete a short application, and some will also pull your personal credit score.