For distributors · How to, under 90 seconds
How do I keep a revolving limit from turning into a problem?
A revolving limit is drawn and repaid again and again. Every drawing has its own date, and missing one stops your supply, damages your credit record and puts the security at risk.
In short
- Each drawing is its own debt, with its own repayment date.
- Write the date down, put sales cash aside as it comes in, and pay on the date.
- Never draw again to cover a drawing that is due.
Each drawing is its own debt
A revolving limit is not a running balance you top up. Each confirmed drawing has its own financed amount, its own charge and its own repayment date, and is owed on that date whether or not the stock has sold.
Four habits
Write the repayment date down the moment you confirm, where you will see it. Put aside the cash from sales of financed stock as it comes in; the date does not wait for the last carton. Pay on the date, not when someone chases. Never draw again to cover a drawing that is due.
What a missed date triggers
Under the documented terms your anchor suspends further credit supply until you are current again. Security over the facility can be enforced.
The FAQ answers the question underneath this one (what happens if I do not repay) directly, for both structures.
Next in this track
What happens between my financed stock order and my anchor being paid?