When a corporation (vendor) issues a line of credit to your company on "Net 30" conditions, you can buy its products or services up to a certain dollar amount and pay the bill in full within 30 days.

So, if your company buys $300 worth of merchandise today, the $300 must be paid within the following 30 days.

Keep in mind that it's better to pay 15 or even 20 days before the due date so that your company's credit record shows that you pay 15 or 20 days ahead of schedule. Which would you prefer: an 80 paydex score or a 90 paydex score?

Key facts you should know about Net 30 Accounts

You can get the items and services your company requires and defer payment for 30 days, preserving cash flow. This is known as "Net 30."

If your file isn't currently active, the DUNS system will activate it when your first Net 30 account sends your "tradeline" to Dun Bradstreet. This is likewise true for Experian Corporate and Equifax Small Business.

Some net 30 vendors will authorize your firm based on little more than a tax identification number and a 411 business listing.

Before your firm may be approved for net 30 terms, certain vendors will demand an initial prepaid order.

You must be patient and give time for the suppliers' data reporting cycles to reach bureaus like DNB's reporting systems.

To establish a company credit score (Paydex) with DNB, you must have at least three reporting tradelines.

Building business credit

When you open an account with a vendor, you must use it on a regular basis. When you acquire a $500 Net 30 credit line, for example, you must make monthly purchases from that vendor for at least a year.

You can create high credit scores in as short as 120 days, but you'll need to use the accounts for longer to properly maximize your credit profile.

Don't make the costly error of making one purchase in the first month, another in the fourth month, and yet another in the tenth month. Every month, you must regularly use all of your new credit lines.

Every month, make purchases and pay them off in full at least 15 to 20 days early (by day 15-10 in the case of net 30 accounts.

Following these procedures will help you establish a business credit history in the most efficient manner possible. Consistency and responsibility are the keys to improving your credit scores and allowing your company to qualify for higher credit limits, more advantageous terms, and the best prices.