The airlines didnt get handouts. They got low or no intrest loans which they had to pay back. The airline I worked for said no thanks, well make it on our own.
To the OP, it seems your companies rely heavily on credit. I only use AMX as a convenience, kind of hard to send cash through my computer. I do have 1 vehicle loan for the biz, other than that if I buy something, I have the cash for it. So, I really dont give a rats azz what my score is, for the most part, I dont use it.
Here are the reasons we use credit so much:
My wife's business is a DMV service. Her customers are large businesses and car dealerships. Let's say You are a customer of hers. You bought 5 trucks and you want them registered.
She gives you the exact amount the DMV website calculator says the 5 regs are going to cost and you write her a check for $2600. Two days later the registrations come back denied because the cost was actually $2598. (They only take exact amounts)
Now Shelly has to go back to find you (another hassle to find the check signer) to get another check for $2598, then turn it back in and hope they get it back to her so she can deliver the plates to you before you temp plate expires in another couple of days.
A couple of days later the DMV calls and says their computers are down and she won't be getting anything back for 3 more days. Your temps expire. You call and
yell at her for about an hour because the cops gave your driver a ticket.
How have we solved this for the past 8 years? Rewind to when Shelly picks up your registrations. She brings them to the DMV with HER OWN CHECK left BLANK so the DMV can fill it out with the proper amount. When your registrations are done she brings them back to you with an invoice for $2738
($2773 + her fee of $175.00 for five regs.) Your trucks are all registered, you give her a check and the world is wonderful. Multiply this over and over.
How long do you think we could go without some type of credit?
The average new car registration is $500.00 here.
In addition to her normal customers in August they had a big 15 dealership sale which produced and extra 80 registrations the the DEALERS PAID ($40,000 she pays first then submits invoices to the dealerships)
Later that same month Fedex left 112 Enterprise registrations on our doorstep ($56,000!)
This month 96 came unexpected when a construction company absorbed a failing company and took on all their trucks ($48,000!)
THESE COMPANIES have accountants and computer systems that DON'T ALLOW them to write blank checks. They have to write an exact amount and the DMV is too incompetent come up with consistent numbers.
Here on her desk are three Toyota Camry's that are identical bought by one company, two are $410 the other is $386! It's impossible to give her customers an exact number!
Do you think doing it this way sounds risky for Shelly in case someone doesn't pay?
She's done over 30,000 registrations since she started and only ONE check has bounced and that guy paid in CASH the same day.
In my business we clean air filters.
Say I get a large manufacturing facility as a customer and they have 200 paper filters on their roof. I charge them $5.00 each to clean them bimonthly for a total of $6000.00 per year. I take those 200 paper filters and turn them into 150 electrostatic filters by making some of them into larger filters (where I can).
Those filters cost me $3500. I don't even make $3500 till 8 months later! All this is fine and dandy as long as I can spread the cost out over a year or two. Usually I spread it out over a year and count the first year as a break even and don't even start counting any profit till the second year.
So I can understand why, if you are just doing pressure washing, after your initial investment on your truck, equipment, etc, you might not need credit except for large jobs that require a higher fuel and labor investment and doesn't pay for 60 or 90 days.
It's not like we borrow $50,000 per month to buy drugs, fancy clothes, or live high on the hog. We borrow because it is the nature of the type of businesses we do.
If I had $150k in the bank I would use it instead. But we don't have it to use.
As of right now I have over $10,000 owed to me that should have been paid in the month of October from companies I've billed for over 2 years now and they've never been late before. That's $10,000 I don't have to buy filters. That makes me timid about making sales. Not making sales affects my business.
Open credit gives me the freedom to say, "Yeah Walgreens, we'll get started right away on your 540 stores and 14,000 filters". Tight credit makes me cringe when I think that Walgreens might send me the letter to get started and I won't be able to come up with the $300k for the filters.
Credit runs most businesses. You probably wouldn't have your house or car without it. When you do a job and send a bill you 've given credit to that business until you have that check in your hand. It's just the way things are done.
