What is a trade reference, and how do I give or get one?

A trade reference is a statement from a business that sells to you, or buys from you, about how you pay and behave. Suppliers ask for them before extending net terms, and you can ask for them before you ship on credit. To get one, list 3 or 4 suppliers who have sold to you on credit and tell each to expect a call or email. To give one, answer plainly with facts you can back up from your records.

What a trade reference covers

It's a short check on a company's payment history, from someone who has dealt with it. Typical questions:

• How long have you sold to this company?
• What credit limit and terms do you give them?
• Do they pay on time, and how late has the worst invoice been?
• Roughly what volume do they buy?

Some suppliers collect these by phone, some by a short form.

How to get references (when a supplier asks for yours)

1. Pick suppliers who have actually extended you terms. A vendor you paid in advance can only say you paid.
2. Choose ones that know you well. Long-standing, regular suppliers are the strongest.
3. Warn them first. Ask permission, give the contact name of the person asking, and say what for.
4. Give full details. Your legal name, address, account number with that vendor, and the person to call.
5. Follow up. If the reference doesn't respond, a slow reply can slow your approval.

A new company may have none. In that case, say so and offer another route: a deposit, a smaller first order, or payment on delivery. Our guide on building business credit for a new company covers this.

How to get references (when you're the one extending credit)

Ask the buyer for three or four, then actually call them. A reference list is only useful if you check it.

• Ask each reference the same questions, so answers are comparable.
• Ask about late payments directly, not only "are they good?"
• Look for a mismatch: a buyer who says they've been in business for years but has references that only knew them for months.
• Treat a reference you can't reach the same as no reference.
• Pair references with other checks: tax ID and business registration, a W-9, and a look at the buyer's website and address. See our guide on checking a wholesale buyer before shipping on credit.

How to give a reference honestly

If a company asks you to vouch for a customer, stick to facts you can check in your records: dates, limits, average days to pay. Don't speculate. If you don't want to give one, you can decline.

Keep the paper trail

Save the references, the date each was checked and who you spoke to, along with the credit application and signed terms. If an invoice goes unpaid later, that is your record of what you knew when you shipped.

Where Shield fits

Shield doesn't issue trade references. It gives wholesalers a US business account, a business credit card with no upfront or subscription fees, and a way to pay suppliers and receive payments, so your payment records sit in one place. Owners can live outside the US, with a US company.

FAQ

How many trade references do I need? Most suppliers ask for a few. The number varies, so ask what they want.

Is a trade reference the same as a credit report? No. A credit report is compiled by a credit bureau. A trade reference is a direct statement from a business that deals with you.

Can I use my bank as a reference? Some suppliers also ask for a bank reference. It covers different ground, such as account standing, and is usually listed separately.

Next step

To see how Shield supports wholesalers with accounts, cards and supplier payments, visit Shield business credit cards.